Ardelyx, Inc. Stock

Great. Good morning, everyone. My name is Bob Klingenberger. I'm with Morgan Stanley. Before we start with the Ardelyx team, which we're very excited to have here, I just want to direct everyone to our research disclosures at morganstanley.com/researchdisclosures. And if you have any questions, reach out to your Morgan Stanley representative. And very excited this morning to have Mike Raab, CEO, and Sue Hohenleitner, CFO from Ardelyx joining us.

So welcome. And I think just to kind of kick things off, Mike, maybe starting with you. Obviously, the company has -- there's a lot that's happened over the last couple of years, moving kind of commercial stage and launching 2 products. Maybe just to start us off, kind of how would you characterize where the company stands today and kind of reflecting on some of the progress over the last couple of years?

Sure. Bob, thank you, and thanks, Morgan Stanley, for inviting us today. It has been certainly a journey for all of us getting to where we are. And I guess the way I describe where we are in our journey is what we all aspire to do, right? We ultimately get into this business to develop drugs and ultimately help people who have needs that are not being met by the current medicines on the market. We have the good fortune of having 2 on the market, one for IBS-C, IBSRELA and the other for hyperphosphatemia for patients on dialysis XPHOZAH. And we are on a path right now to generate this year, close to $0.5 billion of revenue.

We -- as we've said in our last earnings, we are on a path to be profitable in 2027. And with that cash that we're going to generate is going to be the next evolution, the chapter of Ardelyx as we in-license and look at extending the life cycle for particularly IBSRELA when we're running our chronic idiopathic constipation trial. And the reason we're doing this work is if you look at the intellectual property that we have built, we give -- we have a runway now to 2042. So the ability that we have to create additional value for both of these programs is evident in the investments that we're making.

So we're just at the start, frankly, if you look at 2042 being the time frame before we have expiry of our intellectual property, there's a lot of time to build substantive value and help the many, many patients, both with IBS-C and with hyperphosphatemia.

Yes. And you mentioned, right, kind of your guidance for the year and the strong kind of ongoing demand for both IBSRELA and XPHOZAH. Maybe just kind of talk us through some of the comments you made in your last earnings around the payer environment and how you adjusted some of the recent guidance.

Yes. So I'll ask Sue to comment on this as well. But one of the things when we've launched is we said there's going to be an opportunity coming for negotiations and discounting to payers. We started without it because, frankly, as we described, we could have given every single penny of profit away and not had a better position, which was nonformulary nonpreferred. We have now gotten noticed. And I think that was really the genesis of the reguide that we did earlier this year was based upon the pressures that payers do.

That's their job and the business that they're in. They're putting hurdles in front of patients in order to get a prior authorization approved. And just based upon those dynamics, as we looked at it, we felt it was a responsible thing to do to back off from the guide that we do, reframe the business as it was going forward as we start this process with our payers and feel very good about the guidance that we've given, both for IBSRELA and XPHOZAH and the opportunity ahead, Sue?

Yes. I mean the only thing I'd add is the guidance for the rest of the year doesn't reflect that any of those payer pressures are going to be eased off. So we know that these talks take a little time, and we'll look to do something in '27 likely, but we have started the talks. And I think really, as Mike said, what we want to do is make sure that patients and physicians can prescribe and know that their patients will get the product.

Yes. And I think importantly, as part of that, right, you talked -- you sort of -- maybe specifically on IBSRELA, right, the sort of $1 billion -- greater than $1 billion kind of peak guidance. Maybe just help walk us through kind of the funnel to get down to that number and how -- kind of the different components giving you confidence in that longer-term outlook?

Yes. I mean I'll start in terms of the financial piece of that. When we think about our guide for this year and the revision of $350 million to $370 million for IBSRELA, that represents at the mid about a 31% growth rate. And so when you think about the path to $1 billion initially in '29, that would have assumed about a 38% CAGR. So we knew right now growing at 31% to be able to grow at 38%, just felt like that's a little much right now without a huge catalyst. Obviously, CIC is a great catalyst, but not something that's going to really measurably impact '29, just given when we expect approval. So we decided let's decouple the timing with the $1 billion. We still firmly believe in the $1 billion. It just may be a little bit longer than that.

Yes. And I think also for the context is the hurdles are ultimately at the bottom of the funnel. And the demand at the top of the funnel is incredibly strong, right? I mean what we hear from the field and prescribing physicians, we get zero pushback on the clinical value proposition on any of the things and the benefit it provides to the patient, which is one of the reasons we've also put in place the beginning of the IBSRELA Pharmacy Network, the IPN as we refer to it.

And the reason we do that is if you look at where the vast majority of IBS-C prescriptions historically have gone through is through a retail pharmacy. And I don't know if you've been in a retail pharmacy recently, but if you look at it, roughly 90% of their prescriptions are generics. They are not set up given the amount of time it takes for prior authorizations. So to move our prescriptions out of retail and into the specialty network allows for a higher touch. Our data says that there's at least 1 to 2 additional prescriptions that are filled, so refills that go through the IPN versus retail. So it's a strategic move that, frankly, had I to do it over again, we probably would have only launched the specialty pharmacy network because of the high abandonment rate through the funnel of scripts that go through retail.

So there's -- in the dynamics that are happening in our business, the need for any new drug that has a kind of value proposition in a space that has an incredibly successful set of competition like Linzess, that is retail, you need to have a strategy where you begin to have that high touch. Prior authorizations for new medicine is just the name of the game, and retail is not set up for it. So the IPN is a huge part of it, and that transition from retail into the IPN is also part of the genesis of the reguide that we made.

Yes. And I think, Mike, I've heard you in the past, I think, kind of talk through to the kind of the broader market and how many patients and kind of what does $1 billion kind of more or less mean?

If you look at the IBS-C indicated market is roughly 8 million prescriptions written a year. So it is an incredibly sizable market. The epi on it is roughly 13 million people in this country have IBS-C. For us to get to $1 billion, it's south of 10% share, right? So it is a relatively small share to get to that $1 billion. It is actually -- as Sue pointed out, it is the growth rate that had us back off the timing of the $1 billion, not the absolute number because of these challenges that the paying environment puts in place. Our job is to eliminate that friction as much as we possibly can.

Now we could give every penny away of profit, which we obviously would not do, and we would not have a much better position than we have now simply because of the volume of whether it's generic lubiprostone or where we are with Linzess in terms of the price they cut their WAC price in half in the fourth quarter, and they've done their IRA negotiation. So it is a basically generic market that we're competing against. So that's the dynamic. And for us to get to the $1 billion, as you look at it, is less than approximately 10% of market share thereabouts that get us to that $1 billion.

And I think as we've shared before -- of those writers, there's probably 200,000 writing HCPs. We call on the top 50% with only 14,000, right? So that's why we have a sales organization of roughly 144. It's about 100 HCPs per salesperson. And that's the way we've scaled it is to call on that 50% because the other 182,000, we're not going to call on those.

Yes. Yes. And you made reference, right, to just the broader IBS-C market. It's obviously a competitive space. And so as you're positioning, you mentioned some of the kind of the plan on the sales force side. But as you're positioning right IBSRELA with physicians and patients, what are -- kind of what are some of the key kind of differentiators? And just in terms of kind of that go forward, you talked a little bit about the specialty pharmacy network, but just kind of go-forward commercial.

I mean it's interesting. If you look at the history of IBS-C, it is basically one class of drugs historically has been secretagogues. You have the 2 GC-C agonists, then you have Amitiza. So one very basic difference between us and all those others is a different mechanism of action. We're an inhibitor that blocks NHE3. So that's one important thing. But what does that actually mean practically for the patient? If you look at the pain benefit and the differentiation between chronic constipation and IBS-C is pain.

So if you are a physician, Sue and I come into your office, I'm constipation without pain, Sue is with pain. On chronic constipation, which is why we're doing the CIC trial in IBS-C for Sue, that is the differentiator to understand one reason why we're doing the CIC trial, but why for IBS-C, the benefit that we have in pain is so critical if you look at our endpoint. Our clinical trial was a first-line therapy trial. We had some patients that had previous experience with the secretagogues, but most were naive. But given we knew how we would be positioned in the market by the payer world, we have taken a position of second, third-line therapy after those other products have been used.

I think we also know over 70% of patients who are on a secretagog end up not being satisfied or not working. So then that is really our market because we aren't competing in first line, we are getting those failures or those people that need it.

Yes. And maybe just sticking with IBSRELA, you mentioned the patent out to 2042 on the formulation. I guess as you think about kind of the path from here to $1 billion beyond kind of what are driving kind of those growth opportunities as you think about obviously getting -- capturing more share, but just kind of more specifically on kind of what's driving?

I think there are a couple of important levers to think about. One is, as Sue pointed out, the failures on the GC-C agonist. And even with the new steps that are in place with people going back to lubi, those patients will ultimately fail. Sadly, we know that with the secretagogues, the vast majority of patients are ultimately going to be unsatisfied with the therapy that they're being given. And that's where IBSRELA fits. So for us, it is, one, making sure that the physicians and the HCPs understand that their patients will ultimately be dissatisfied with the current therapies that they're on.

Two, that there then is a choice. And we get zero pushback in terms of clinical benefit and the proposition that we provide. Third, that we -- if you put your prescription through the IBSRELA Pharmacy Network, the probability is orders of magnitude higher that it will get filled. So it's a change of habit where these physicians, the HCPs are accustomed to writing a script to retail for an IBS-C drug. So it's a change of mind that we are working on to help them understand, this is a specialty drug. These are for people that need to be treated better, differently than they historically have. And going through retail and going through GC-C agonist is insufficient.

So you need to change the frame of mind to say, okay, now I need to treat these patients differently. Similar to the way they do ulcerative colitis or other things within their offices, which go through specialty. So it's actually a mind shift that we're in the midst of working through to say, now put your patients through. You're going to have far greater certainty that not only we get the first script filled, but then subsequent refills because the specialty pharmacy will remind you, do all those things as a higher touch approach. And as we make that transition over the ensuing months, that's going to be an important differentiator between us and the other products.

Yes.

And when I think too about just to add about the entire life cycle that we have, we are going to be continuing to allocate capital towards life cycle management because we have that long runway. So it's something that we're doing as part of our capital allocation plan.

Yes. And that was actually going to be my next question where you mentioned briefly the CIC study you're running, the ACCEL study. Maybe just kind of remind us all the kind of the genesis for that, obviously, beyond just the kind of the 2042, but what the unmet need and then the trial that you all are running?

Yes. I mean I'll start. But basically, all of the other secretagogues are approved for both IBS-C and CIC. So when you think about going into a physician, as Mike said before, if one of us has pain and the other doesn't, the physician doesn't have to think about it. And so for us, it's -- we can pursue that indication now just to continue to make it as easy as we can for a physician who's not sure whether pain or discomfort might be included with the constipation. So something we could have done before if we had the capital. And I think now that we do and we can do that study, it's great. So we're enrolling now. We are going to do a readout mid next year and go from there.

And for us, the confidence in this, Bob, is we're all retreating constipation, right? If you look at IBS-C, it is made up of constipation and pain, as I said. So we know what the response rate is, and that was the basis of the design of our CIC trial was the benefit that we see in the constipation component of IBS-C. If you look at the evolution over time of how the treating world considers chronic constipation for IBS-C, it used to be 2 pretty distinct groups of people. The reality is they really overlap. It's more than a Venn diagram because you have chronic constipation people that will move if they're not treated into IBS-C.

You have people on IBS-C that their pain is taken care of, but they then become constipation. So they go back and forth. So it is actually a far more fluid indication between the 2 and the fact that we don't have the ICD-9 code. We don't have the indication for CIC makes it an extra step for the physician to say, 'Oh, gee, I have to write down the ICD-9 code only for IBS-C because if I do CIC, it will not get through prior authorization unless there's a lot of work on the part of the treater.

So in terms of just sort of the incremental patient opportunity, CIC, how big relative maybe to IBS-C and...

It is a huge market. It's massive, right? So it's about -- compared to the 13 million IBS-C, the epi in CIC is roughly 30, 3-0 million people. Now the vast majority of those patients are treated well through over-the-counter medications, right? So then you have to take a significant haircut there. But those patients with chronic constipation that are actually going to their physician, they're not getting satisfied by over-the-counter medications. So they need a prescription medicine. So is that roughly about the same size as IBS-C is kind of the way I think about it. It's hard.

If you look at the data, for Linzess in particular, they have 2 lower doses that are indicated for CIC. The realities are physicians use for IBS-C, the lower dose, for CIC, the higher dose. It's hard to use that. It's the best proxy that's out there. And it would tell you it's roughly the same size.

Yes. And it's really, to your point, to be able to be used for both patient sets as they present to them.

Exactly right.

Yes. Maybe just kind of shifting for a moment to XPHOZAH, your second product. I think there was -- there's been a lot of, I think, questions and you all have obviously been talked about this a lot in terms of kind of reimbursement and what you've put in place for that program. Maybe just kind of give us the latest on where that stands for XPHOZAH today.

Yes. I mean taking a step back from it as I've been in the business for the better part of 25 years, in developing and commercializing drugs for hyperphosphatemia for dialysis patients. It is really a hidden population, although all of us live within an hour of a dialysis center, most of us don't know that, is there's 550,000 people in the world that are on dialysis -- in the United States, excuse me, that are on dialysis. And one of the things that they have to deal with when their kidneys no longer function is phosphorus.

Phosphorus is something with functioning kidneys that none of us hear about or think about, but it is an independent predictor of morbidity and mortality in that patient population. We lose 20% of dialysis patients per annum. And so for us, the ability to provide a medicine with a new mechanism has never had anything but binders is a critically important thing for the well-being of those patients. So when we were launching the medicine, one of the challenges in dialysis is you do end up potentially being in a government bundled system for payment.

We know for new innovative drugs, it is a short life for those medicines because once they finish a period of time when you get qualified to go into the government payment system, the drugs go away. Very good medicines have disappeared that would help these patients. So we made the decision, and it's a controversial one and certainly provided challenges for everyone to understand is we would not go into that system. And what that means is the Medicare population, which is roughly 60% of the patients on dialysis, no longer have the same sort of access in terms of through insurance. We have a patient assistance program for those that qualify can get it. But we focus on the Medicaid and the commercial sectors of that patient population, which is 40% -- so we focus our commercial efforts or our sales efforts around those 2 areas.

And from there is where we've generated all the revenue that you've now seen since this began in '25. We're coming to the end of what's referred to as the TDAPA period of that period of time to qualify to be paid for under the government system. And I think that will change some of the dynamics for the prescribers, the dialysis organizations and their engagement with us and XPHOZAH. That will begin in '27. So part of what we did at the same time as we reguided for IBSRELA is as we said, 'Hey, listen, with the dynamics that are happening out there, including now a quality measure, which has never been in there in my career of how well you as dialysis organization are doing in managing phosphorus -- that quality measure could be a tailwind.

That could help engage physicians, the DOs, organizations to do a better job than historically has been done in managing phosphorus. So that's a good thing. But the dynamics as you look at other potential competitors that may or may not choose to play in that system of getting the government payment may add additional confusion and challenges in the market. So we felt it was prudent to step back from the $750 million and say, we'll come back to you once we see what those dynamics look like, both tailwinds and headwinds to give you the Street, both from an investor from sell-side as well an understanding of what that dynamic looks like because it is confusing. It is a different thing. There's no real proxy for what it is that we're doing and help us help them to better understand the market going forward.

Yes. And I think you referenced, right, the sort of choice not to go in the bundle, have now a couple of year experience in a period. I guess what kind of the learnings, what has maybe surprised you kind of as you guys have gone through that journey the most and the learnings for kind of the forward outlook of the product, which you described a little bit already.

Yes. I mean it is understandable that from the investor side and the sell side that it is hard to understand because we've made a choice to not play with 60% of the market. That seems crazy. But that 60% of the market would never generate the kind of revenue long term, particularly with 2042 now looming because you have a finite 2-year period of time and you -- by any proxy that's out there, you're going to stop selling the drug after that period in any substantive way. So we decided, as I said, to not play that same sort of game and find that what we're doing is having a meaningful impact in those patients.

We know anecdotally that there are benefits that have come to those patients that you've not seen previously with binders. And that is our value proposition is we are normalizing or helping to normalize or get patients to levels of serum phosphorus that previously haven't been able to attain. And for us, that's our true north. And anything that we can do to build this business, our guide is $110 million to $120 million in the face of what is happening for the other products in going through the bundle. I'm proud of the team and what it is that we're accomplishing there as we look to grow this business continually going forward and beyond 2042.

Yes. Maybe just we've gone through kind of the products. Maybe, Sue, this probably pertains to you. Just looking at the kind of the P&L. And Mike, I think you mentioned right profitability for next year and '27. Maybe just talk us through the kind of the components as you think about kind of this -- both the bottom line is probably what you can maybe talk to a little bit more on a qualitative basis.

Yes, absolutely. So we were excited to be able to declare profitability because I think as we were going through the year at different earnings points and investor conferences, people were asking us and we're like, well, it's around the corner. We think we'll get there shortly. And I'm proud of the team to be able to say that we will be profitable next year. And the way I see that is when you think about our OpEx and what we guided to this year, we said under $500 million is what we'll be able to -- what we'll spend. So OpEx has kind of leveled off. We're not -- there's not a big new sales force we're putting in.

We're definitely doing optimization around the edges, but nothing big. So the way I see it beyond the additional R&D that we're going to continue to invest behind the CIC trial and 531, there's not a measurable increase there for any reason. But we do see sales continuing to go up. So whether it's a CAGR similar to what we have this year or something else, we know sales are going to grow faster than OpEx. So when you think about those components, the math will definitely be there to be profitable. So, go ahead.

And what Sue just said for our businesses is an incredibly rare thing.

Yes.

Right? And I think that is also real and important thing for everyone to really focus on, there aren't many companies that declare profitability in the way that we are. I mean it's a handful per annum that you can see that transition from losing money as we tend to do in this industry for a long time. And that threshold that we're crossing right now allows us to generate a lot of free cash. I mean we're basically funding our operations now. And that loss is narrowing dramatically over time.

And with something today that has a gross profit of better than 95%, our ability to then reinvest in the enterprise, whether it is our own innovation, external innovation, the team that's out there doing business development, looking for opportunities across the world, for me, is incredibly exciting because this is what we're supposed to be doing. We're supposed to build an enterprise that generates its own cash minimizes dilution to our investors and our shareholders, reinvest those dollars because of the management team and the opportunity that we have here to redeploy that capital.

Not many of us get to do this. And that's aspirationally. I think what we all want to get to. It's really hard. It is a long journey, but we're there, right? And our ability with the amount of cash that we generate to do something substantive is I don't think is well appreciated, one, the journey; and two, what it means in the very -- in the not-too-distant future.

And I do think, too, along with that, we knew this was a day that was coming in a good way. So we did put out our capital allocation plan earlier in the year because we want investors and everyone to understand what are we going to do with that capital. We are already funding our own operations. So it's really all about growing IBSRELA and continuing to grow that at the best extent we can, investing in life cycle, whether it be internal R&D or the business development that Mike just spoke of and then the financial discipline, whether it's using our capital to do other things within the business or refinance our debt, which I know you guys help -- were great helps with that earlier in the year or anything else we want to do with our capital. So they're kind of our 3 pillars for capital allocation, which is going to become very useful for next year.

Yes. I took my next question -- but I guess maybe just to remind us then, Sue, too, in terms of in the second quarter, kind of where you sit in terms of cash kind of debt and then obviously, with the overlay of what you talked about with '27.

Yes, absolutely. We ended second quarter at almost $282 million in cash. We do have a debt out there of about $250 million. We did draw down another tranche of that debt in June for about $50 million. So all in, we have $250 million of debt with SLR, and then we've got $282 million in cash. So we continue to feel like that cash flow is going to keep generating, which is great news.

Yes. And you both brought up sort of the business development aspect of things, right? And I guess just how do you think about that from a fit perspective, technology, where -- and maybe a little bit of the therapeutic area overlay as well?

I mean narrowing into our therapeutic areas makes sense, right? So that's a no-brainer that we should always try to look at where we can, at a minimum, leverage part of the organization. I think one of the most important things, though, and it is the hallmark of our industry is the opportunistic look at everything, right? So we're going to look at other therapeutic areas because that is critical to do. And our ability -- given this team, if I look at my -- the team that's part of this company, everyone has been in multiple therapeutic areas.

So it isn't out of the realm of reasonableness to think that we're going to look at things that are not necessarily in our therapeutic areas. We'll look at things that are adjacent to. And one of the examples that we give is hepatology, which is an adjacency to what we do in GI, but we're going to look broad because of the cash we generate, the experiences we broadly have as a team in multiple therapeutic areas and understanding where we can differentiate as we look at opportunities. And right now, we'll look at things that we can afford to do, right, where the cash that we're generating is going to be relatively more likely to be preclinical, clinical, early clinical, Phase I, maybe even Phase II or about to go into Phase II because that's something we can afford to do because as you know, many of those things are going to fail, right?

That is just the nature of drug development. So you can scale in based on success, if we assume success as we generate more cash, we can afford to do it, right? We can afford to run the clinical work at the same time as we bring earlier stage things in. Then as we generate more capital, our ability to do more substantive and sizable deals, transformative deals are certainly on the horizon as well.

And maybe just kind of piggybacking on that, you obviously have an internal program that I think is probably the one thing we haven't touched on. How do you -- how does that kind of fit into that overall story that you just said about bringing in assets over time as well?

Yes. Tenapanor is a phenomenal molecule in what it does. I think we've learned and continue to learn more of how it benefits patients. So when we looked at our internal opportunities, 531 was a program that we had started in the early days as we looked at NHE3 inhibitors. What is really interesting about that molecule at a very basic level, it is about 10x more potent, about 30x more soluble. Why does that matter? -- is if you look at potency, it could be lower doses, it could be once a day.

If you look at solubility, we do know the pH sensitivity of tenapanor is and cause some precipitation in the lower GI. So if you have something that can actually hit NHE3 in the GI tract all the way through the length, that could be a better efficacy profile. It could be once a day. It could be lower doses. So those are all the things that we would explore going forward. We are in early preclinical. So we've got to follow the science is if there are things that come out in our preclinical work that say we can't go forward, we obviously wouldn't. But it is a very interesting molecule, which is why we're pursuing it.

Yes. So I think we've covered a lot of the ground. And maybe just as we're kind of wrapping up here, what do you feel like is sort of maybe underappreciated about the story, right? I think we've gone through a lot of the nitty-gritty details, but maybe at a high level, what do you feel like maybe folks are not getting with the story?

I don't think people get the story is the answer, not to be glib, but there are not a whole lot of companies that look like Ardelyx out there. And I think because of that, it's hard to figure out. The guide down from where we were, just to tell you that journey, we grew 74% last year to almost $274 million. We originally guided to 50% growth, which totally made sense, right? I mean, going from 74% to 50% growth in the original guide was completely appropriate and logical before we got the headwinds of payers. And we're still growing greater than 30%.

And I don't think people have given us the credit -- we certainly are in the dog house for the reguide, but we're still growing incredibly well and generating an awful lot of cash and soon, as we've talked about, to be profitable. So I don't think people understand that this is a company that is going to generate money, is going to be able to continue to reinvest in itself is going to limit dilution dramatically to shareholders. We've not raised capital -- dilutive capital in over 4 years, almost 5 years now. So that is not, I think, appreciated. We've been public since 2014. So I think in some ways, out of sight, out of mind.

And this is a name that I think should be a cornerstone for so many investors because it is predictable. It is going to grow. It is going to generate profit. It is going to -- we are going to reinvest that money and create even more benefit for patients and our shareholders. I don't think that's well appreciated. The complexity of the stories around XPHOZAH, I get that people don't quite understand it and maybe don't discount it to zero but it is contributing and continue to contribute. I don't think what I've just described or any of the things that we've talked about this morning are well appreciated or understood by the buy side. And I understand it. That's our job.

That's why we're here talking to you and meeting with investors today is I don't think that's sufficiently appreciated that this should be a component of a portfolio unlike the high beta that you're going to see with the hope and promise of clinical work where the vast majority fails. We are succeeding, we are winning, and I don't believe that's appreciated sufficiently. Sue, anything to add?

It's really well said. You saw me nodding the whole time. No, I really wouldn't. I mean I do think the sell side, the analysts that cover us have us much higher than what the stock price would reflect today.

Yes. Well, maybe just as we have like a minute left. And I think, Mike, we start off with just kind of the journey a little bit. And I think just looking forward, maybe just -- we talked about a little bit in terms of what's maybe underappreciated. But as you look forward to kind of the end of the decade and into the next decade, kind of where do you hope we're having this conversation a couple of years that we're kind of...

We talk about the end of the decade. It's not that far away, but 5 years out or less, less, you look at what we can do over these next 4 years and whether it's a well-used phrase of a string of pearls that we bring in, that we develop, this is a company that is going to be able to stand on its own, has the team now in place. If you look at the team over the last 24 months, I've rebuilt my entire management team of people that have just incredibly deep experience in building companies, understanding capital allocation.

I mean, to be able to talk about capital allocation in a company's evolution is something we all aspire to do. So if you look at -- I believe, 4 years from now, if we're sitting here at the end of the decade saying, saying, 'Gosh, Mike, remember when we were at the Marriott Marquis in New York in '26, and I asked you that question,' we're going to have multiple products on the market. IBSRELA and XPHOZAH are going to continue the growth that they're on and then some. CIC will be approved. We'll be treating all the patients with CIC and IBS-C who are failing, 77% of which we know are underserved by the current products on the market and other products that we're doing the same thing.

Our novel way of commercializing, we pay attention to the dynamics of payers. We look at all these things and make maybe nontraditional, but I think good for the business decisions and ultimately for the patients that we serve. I think we'll be talking about multiple products beyond the 2 here. How many that is, I don't know, but we're going to be able to afford to do a lot. Anything to add?

I think that was well said. Thanks.

Great. Well, thank you both for being here. I think we're on time.

Bob, thank you very much.

Thank you. Yes. Thank you.

Thanks for the partnership.

Thank you. Welcome to the Ardelix Second Quarter 2026 Earnings Call. All participants will be in a listen-only mode. I would now like to turn the conference over to Lisa Caporelli, Senior Vice President of Investor Relations and Corporate Communications. Lisa, you may begin.

Thank you, Jen. Good afternoon, everyone, and welcome to our second quarter 2026 financial results and business update call. Earlier today, we issued our earnings release, which can be found on the investor section of our website at ardellix.com. Slides that accompany today's call will also be found on our website. website. On today's call, I am joined by Mike Robb, President and CEO of Ardelix, Eric Foster, Chief Commercial Officer, and Sue Hohenleitner, our Chief Financial Officer. Before we begin, I'd like to remind you that some of the statements made during the call today and forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties that may cause our actual results to differ materially from those expressed or implied, including those described in our annual report on Form 10-K, our quarterly report on Form 10-Q, which was filed today, and from time to time in other documents filed with the SEC. These forward-looking statements speak only as of today's date, and while we may elect to update these forward-looking statements, in the future, specifically disclaim any obligation to do so, even if our views change.

I will now pass the call over to Mike. Thank you, Lisa.

Good afternoon, everyone, and thank you for joining us today. This afternoon, we issued a press release announcing our Q2 financial results and a revision to our guidance. I'd like to share my perspectives on our release, drivers of those results, and how we're positioning the business for future growth before I turn the call over to Eric and Sue to cover the performance in detail. In Q2, Israel and Xhosa generated a combined revenue of $118 million, of 31% year-over-year, the largest quarterly revenue in our company's history. This is a meaningful milestone and it is important to acknowledge. Growth in the second quarter was robust and yet performance fell short of our expectations. To be clear, Israel demand is strong, position confidence remains, and our view of the long-term opportunity has not wavered, including achieving a billion dollars in revenue.

As we anticipated with the establishment of the Adrella Pharmacy Network, our investment in the field reimbursement team, and with Adrella's continued success, payers have implemented significant hurdles that impacted new patient starts and access to Adrella. Eric will provide further details in his commentary. The fundamentals of the Uvzrella business remain strong, and by staying focused on execution, improving patient access, and partnering closely with providers, we are positioned to drive continued adoption and create meaningful value for both patients and shareholders. The team had an excellent quarter. Growth continues to be driven by patient need, physician adoption, and a differentiated clinical profile. As you know, on June 26, the DC Circuit Court of Appeals affirmed the district court's dismissal of our lawsuit against CMS. As a result, oral-only phosphate luring drugs remain in the bundle.

With this decision, we have determined that we will no longer pursue further litigation on this matter. Now, while our strategy remains, we recognize the market dynamics ahead of us present challenges to navigate. As we have always done, we remain committed to ensuring patients in need have access to Xfosa. Now, taking a step back, we operate in a complex business with significant external pressures and with new ones that emerge almost daily. Even so, we are in an enviable position. We have two first in class commercial products, both differentiated. Growing quarter over quarter and year over year.

Our strengthening balance sheet is driven by top line growth, disciplined expense management, and a thoughtful capital allocation strategy. We have built a solid foundation, are investing in our future by advancing to Napanar next generation NHG3 inhibitor, and we are continuing business development activities to further expand our pipeline. We are building a robust patent estate for Tanapanoor, anchored by multiple Orange Book listed patents, including our 299 patent. We are a well-funded, self-sustaining, high-growth company on the path to sustained profitability in 2027 and beyond. Our enthusiasm and belief in our business, our competitive position, our strategy and the long term value we are creating has not changed. Now, with that, I'll turn the call over to Eric. Eric?.

Thank you, Mike. Ipsrella revenue grew 33% year over year, and as Mike noted, we experienced significant payer hurdles that had a direct impact on access to Ipsrella. While new patient starts have been slowed by these hurdles, we continue to see strong growth in refills and total prescriptions, reaching our highest demand quarter to date. We understand the ongoing market dynamics Ipsrella is facing and are confident that the following four actions will position Ipsrella for future growth by addressing increasing payer hurdles and accelerating Ipsrella demand. One, leveraging our field leveraging our dedicated field reimbursement team, which we doubled in size in the first half of this year, and we've all been in the field as of July 1st, to help navigate HCP's cumbersome paperwork and burdensome step edits. Two, reinforcing our continued efforts to drive more prescriptions through the Upsurrella Pharmacy Network, or IPN, to increase fulfillment rates and improve adherence. We deployed additional resources along with our FRMs and Salesforce to provide patient focused high touch support that improves the patient experience. Our data shows that when a prescription goes through the IPN it results in higher fulfillment rates, faster fills, and in one additional refill per patient on an annual basis.

Three, increasing the frequency of engagement with our target HCPs is one of the most important drivers of demand. In Q2, we implemented initiatives to expand our sales organization to 144 representatives to increase the frequency of engagement with our targeted high-riding HCPs. With this expanded sales force, along with our FRMs, we expect to see continued direct and measurable impact. And while early, we are encouraged by the results. Four, we are expanding our patient awareness and engagement initiatives. Alongside our partnership with the LPGA and ongoing omnichannel and digital efforts, we are initiating new direct-to-consumer activities during the second half of the year. Our consumer-facing messaging is expected to increase brand awareness among our targeted patient population, leading to important conversations with healthcare providers, which our experience tells us leads to an Ipsbrella prescription.

The unmet need remains high for IBSC patients and highlights the important role in serial plays for patients seeking treatment options. Last year, nearly 7 million prescriptions were written for IBSC-indicated drugs, reflecting both the large number of patients seeking relief despite existing therapies and the significant patient burden that still exists. multiple treatment options are available, our internal research indicates that as many as 77% of patients on a secreted guide continue to experience persistent symptoms. The patient need is demonstrated by record highs in Q2 demand, total riders, total prescriptions per rider, and market share since launch, and further supports our conviction in the SRL are reaching $1 billion in revenue. As we continue to work to execute on the four initiatives I just outlined, I am confident that these efforts will address the barriers identified, accelerate adoption, and enable more patients to receive the treatment they need. Moving on to Xposa. We are impressed by the resilience of Xposa as we saw strong momentum in Q2. With more than 550,000 adult patients with CKD on dialysis in the US, approximately 80% are treated with phosphate lowering therapies in an effort to achieve and maintain target phosphorus levels. As the number of patients treated with Xposa grows, our conviction in its value is reinforced.

Our priority remains clear, ensuring Exposa is available to patients who need it In Q2, EXPOSA generated 27% revenue growth year over year. We saw solid growth across key metrics with notable increases in total dispenses of 33% and in paid prescriptions of 25% compared to the same quarter in 2025. In addition, EXPOSA reached its highest total riders per writer since Q1 2025. While we are encouraged by EXPOSE's performance, we continue to recognize and assess the challenges ahead of us. Our focus remains on enhancing the effectiveness of our commercial approach by refining Salesforce deployment and strengthening engagement with healthcare providers and dialysis organizations. These initiatives are designed to ensure we're reaching the physicians treating the patients most likely to benefit from EXPLOSA while continuing to build awareness across the nephrology community. I'm confident in the team's ability to drive demand for both medicines by overcoming the access challenges for Absrella and maintaining disciplined execution with Exposa in the second half of this year. need our differentiated products as indicated by the growing demand for both Ipsrella and Exposa and helping more patients with our medicine is our top priority.

I will now turn it over to Sue. Sue?.

Thank you, Eric. Our second quarter 2026 financial results reflect the ongoing transformation of Ardelix into a financially strong organization that allows us to leverage our revenue base to fund both our current commercial operations and our advancing pipeline. This quarter, we maintained our focus of turning disciplined capital allocation into a clear strategic advantage. In the second quarter, our total product revenue was $118 million compared to $90 million in the same period last year, representing 31% growth and demonstrating the need for our differentiated products. Izrella is our primary growth engine. Our Q2 2026 revenues of $86.2 million increased 33% compared to Q2 of 2025. We are expecting sequential revenue growth in the second half of 2026, with the fourth quarter delivering the highest revenue of the year. EXPOSA continues to demonstrate resilience. Revenues for EXPOSA during the quarter was $31.9 million, an increase of 27% compared to the second quarter of 2025, driven by strong demand.

Our financial strategy remains focused on driving towards sustainable profitability, which we are now projecting in 2027. We are a well-funded company investing in our growth accelerators, our commercial operations, and our pipeline, all of which require high-impact investments in R&D and SG&A. R&D expenses for the quarter were $26.1 million compared to $15.7 million for the same period in 2025. This increase primarily reflects development activities and patient enrollment costs for the ongoing Excel Phase III clinical trial in CIC. SG&A expenses were $101.4 million for the quarter compared to $84 million for the same period in 2025. This increase reflects deliberate investments to address the access barriers and drive future adoption of IZRELA. Net loss for the quarter was $16.7 million, compared to a net loss of 19.1 million for the same period in 2025.

The net loss for Q2 2026 includes $15.3 million for non-cash expenses from share-based compensation compared to $11.7 million for the same period in 2025. We ended the second quarter with $281.8 million in cash, cash equivalents, and short-term investments, and our liquidity remains robust. As previously announced, during the second quarter, we drew down $50 million from our existing arrangement with SLR for general corporate purposes and to enhance flexibility, Thank you. to support our ongoing strategic initiatives, all in line with our capital allocation strategy. Now turning to guidance. We issue guidance based on a high degree of confidence and our ability to deliver. And if things meaningfully change, we are committed to updating those projections. Starting with 2026, for Absrella, taking into consideration the current environment and our proactive initiatives to increase access and fulfillment, we have made the prudent decision to lower our full-year 2026 guidance for Absrella to a range of $350 to $370 million. This revised guidance represents annual growth of more than 30% at the midpoint.

This would suggest back half sales would be roughly 60% of the full year, acknowledging increased sequential revenue growth in the upcoming quarters and in line with prior year's growth patterns. Now turning to EXPOSA. We are reiterating our full year 2026 revenue guidance to be between $110 and $120 million. Now moving on to OPEX. With the decision to modify our guidance for Exrella revenue, we have proactively taken additional efforts to manage spending and are revising our 2026 OPEX guidance to be below $500 million. We are managing the business with discipline as evidenced by these actions. Moving on to our longer-term guidance. A few things first. Let me be clear. We are still on a path to achieve a billion dollars in revenue for Absrella.

However, with the 2026 revenue revision, we are evaluating the evolving market dynamics and the impact on the timing of this achievement. For EXPOSA, we have been assessing market dynamics as well as future growth projections in a period of uncertainty. Therefore, it is prudent to revisit our internal assumptions and pull our $750 million revenue guidance. We believe these are the right decisions and at this time are the right actions to take to ensure that any forward view we provide reflects the current reality. As we are on the cusp of profitability and transition into a more steady and measurable cash flow positivity in the near future, our financial strategy is guided by our three capital allocation priorities, which remain unchanged. Accelerating Izrella growth, actively progressing our pipeline, and maintaining financial strength. In closing, we are funding our own operations and pipeline from our revenue base, and we remain disciplined in our spending, aggressive in our commercial pursuits, and committed to delivering value for both patients and shareholders.

With that, I will hand it back to Mike.

Thank you, Sue. The demand for our medicines is evident. We do understand the challenges that we are facing and we've taken decisive action to address them. We remain focused on executing on our 2026 priorities, including growing Israel demand by improving patient access, maintaining exposes momentum, building, expanding our pipeline and delivering strong. financial results. I have tremendous confidence in our team, our strategy, and our ability to execute. We are committed to our patients and creating long-term value for our shareholders and thank you for your continued support. With that we'll open the call for questions. Operator?.

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad now, and you'll be placed into the queue in the order received. In the interest of time, we ask that you limit yourself to one question. Once again, if you have a question, please press star 1 on your phone now. And our first question today will come from Rowana Ruiz with Lear Inc. Partners.

Hey, guys, you have Ryan on for Ruana. Thanks for taking our question. Maybe can you just talk about the underlying demand metrics that you guys are tracking as you exit Q2 and through July and how that gives you confidence heading into your revised full year guidance, and then maybe just quickly, can you also just talk about the the pushes and pulls that are baked into this new guidance for Abdulla. Thanks.

Sure. And so it's all for Israel and not exposure, correct? Yes. Correct. Eric? Yes. Hey, Ryan. Thanks for those questions. So as we look at performance right now, as we've talked about, you know, we continue to see really strong refills and total prescriptions. So we'll continue to take a look at that. Clearly we're excited about the highest demand quarter that we've had to date. So we're going to continue to make sure that we focus on that as well as prescriptions going into the Uppsala Pharmacy Network. We know when that happens, we get higher fulfillment rates, faster fills, and on average, one more refill on an annual basis per patient.

So those are key metrics for us that are giving us confidence as we look into the back half of this year, that we'll continue to be able to have that.

control growth that we expect. Yes, and the only thing I would add, Ryan, is that, you know, the pushes and pulls that we talked about have all been factored in. So, we've seen the current performance in the first half of the year. We know the friction that we've seen, and we have baked that into the guidance that we have for Ipsrella.

And we'll move next to Dennis Ding with Jefferies.

Hi, thanks for taking my questions. I had two on Ipsorala. So number one, it sounds like demand is fine, but access is getting more difficult. I think that's really the new piece of info for me. Can you give more color on what those hurdles are? Are these scripts still getting filled, but it's taking longer? they're just getting completely blocked or they're more step edits or what's going on there exactly. And then number two, you guys have called out many times the favorable impact from these specialty pharmacies. It's been around nine months since that got implemented and you guys have sounded confident the last few months. So is it possible to share a few quantitative metrics on things like how often are scripts being written as a sign of underlying demand but then actually how many of them are actually getting filled over the last few quarters and I'm assuming that portion or that percentage is getting better over time.

Thanks.

Yes, thanks for the questions. I'll ask Eric to address most of that. One comment though is, I think what was important as we talked about is starting the IPN back at the end of last year. As Eric has mentioned on every call that we do see better fulfillment rates and on average one additional prescription that goes through the IPN and the special network that we've established. and incredibly fortunate that we started it then. I think as I said in my comments and Eric reiterated, it is the extent of the step edits have been put in place was not something that one would anticipate with this product. We're clearly getting attention given its growth and success, but you hit the nail on the head. The demand is still there. It is just harder for patients to get through and that's.

with the work that Eric and the team are doing with the FRMs and IPN. Yes Dennis, so give me a little bit more color on that. So two things that we were seeing, so one we're seeing more step edits and two more stringent authorizations. So you're exactly right, what we're seeing is more of a slowing of the new patient starts, so not blocking but a slowing due to those two things. So we feel confident around those four actions that we've put in place that we'll be able to accelerate demand as well as improve pull through as we go through the back half of this year and again you're right we were as I just said excited about first quarter being the highest our second quarter about the highest demand quarter that we've had to date so we know that those measures can work and are encouraged about some early signs that we're seeing there.

Got it. Thank you. We'll move next to Chris Raymond with Raymond James.

Hey, this is Stanley Chomp for Chris Raymond. Thanks for taking our question. You guys have had pretty active business development efforts for a bit of time now. Can you talk about your view on the current environment for finding assets and opportunities in light of all the recent M&A activity going on in the industry? And, you know, as the business has evolved and the markets change, changed? Has your thoughts or strategy shifted at all over time? Thank you for the question.

I think we are looking at opportunities every day, and a substantial number of them. It certainly doesn't lack for opportunity. I think we said in previous calls, you kiss a lot of frogs before you find those things that you're going to bring in. So the team is actively looking at a number of things. We prosecuted a number of them and have not gotten over other things that we find as part of the due diligence process, that's what we do. I'm very optimistic that we're going to be able to build this pipeline, certainly as generating the cash that we are. It's an exciting next step for the company.

And certainly with what we have with Snap-on-Or, particularly the 299 patent, gives us runway with Snap-on-Or alone that's really quite significant that my guess is not fully appreciated through 2042. And the 531 program as well, if it bears fruit, is yet another leg on the stool that I think is critical for that effort.

Our next question will come from Matthew Caulfield with H.C. Wainwright.

Hi, guys. Thanks for taking our question. Just focusing on the discussed access challenges for Azrella, appreciated the color in the comments there so far. But are there any, are these factors something that's gotten worse over the past couple quarters? Or in other words, what, if anything, has changed for the access challenges over the past 12 months?.

for example? Yes, I'll ask Eric to comment on that. The thing, if you recall, when we talked about how we approach market access is we have taken a position that we wouldn't rebate, negotiate, and discount until there was a need to. And I think what we're seeing here in terms of the stuff that it's in the hurdles of patients are being forced to go through, which is frustrating for everyone, merits the kind of discussions that we're going to begin having and having already with the payer community. This is their business. That's what they do. They put step edits and hurdles in place for patients, and ultimately you look to manufacture to offset those things. It's a tough business, but ultimately what we have put in place with the FRMs, IPN, and the team that Eric has built gets us through those hurdles that exist. That's why we structure it and do it the way we do.

Yes, I would just add that when you have the success that we've had really over the past couple of years, one of the things I think that there's a key takeaway here is that payers certainly are paying attention to that. And the speed and the extent to which these more stringent PAs and step edits were put in place and the impact of those, you know, we're not really anticipating. that it would be as quickly as it was. But with that, we feel confident about the things that we started to put in motion late last year and early this year, and are pleased right now that we've got the additional field reimbursement managers in the field to be able to work with physicians and patients to navigate those hurdles. And then that's what we are considering as we've looked at the updated guidance that has given us confidence for the back end of this year.

And we'll move next to Laura Chico with Wedbush Securities.

Hey, good afternoon. Thanks for taking the questions. I guess one, just follow up there, Eric. If I'm doing the math right, I think the new guidance for IBSRELA implies about a 30% increase in the second half over the first half. So, what you're saying is that the deployment of these new people is going to help you facilitate the appeals process? process and kind of get more of these scripts recovered? Or is it more of a matter, more of a function of getting new starts through the queue or just finding new patients? And then the second question just relates to the comments around IP that you made, Mike. Can you confirm if there've been any ANDA challengers thus far And I guess, you know, as you're expanding the patent portfolio, I'm just curious if there's other barriers to generic competition entry that we might be, that we should be considering. Thanks very much.

Yes, thanks Laura. Just a quick comment on the second question first. We won't go into specifics as to whether or not we've gotten challenges at this point, but you can imagine for a product that's growing this aggressively that there's going to be interest. That's something that we certainly anticipate. What's interesting is remember this is a non-absorbed drug, so it is not the PKPD traditional way that you would use it. that you see generic drugs getting approved. And there's product specific guidance that you can find from the FDA on what it takes ultimately for those approvals. So that is a barrier in and of itself. Our 299 patent, as we talked about, is a critically important patent, albeit a formulation patent.

These are complex molecules that we've designed. not as straightforward as simple formulation. The formulation that we use matters. And other IP that we're building around this is exactly to bolster that even further. So we have great confidence in 299 Estate and the others that are coming and that we already have to strengthen that position through 2042 and potentially beyond.

Yes, and Laura, I would add in terms of the focus for the field reimbursement managers, it's really both. It's new patients as well as those patients that were previously identified that are working through the process. So if we think about the field reimbursement managers and they're able to focus on approval rates as well as resubmission rates, it really can address any of those hurdles if it's a new patient or someone previously identified working through the process. Thanks very much.

Our next question will come from with .

Hi, great, thank you. I'm just wondering, are you seeing this payer pushback dynamic broadly across the IBS categories, so with some of the competitive products as well? And also, is it restricted to just certain plans, you know, like an Aetna or Blue Cross or CVS? Or are you seeing it kind of broadly across all of the payers? And then on Exposa, could you just elaborate a little bit as to why you decided to, you know, just withdraw the 750 as opposed to? to revise it down to something that you are more comfortable with. Thank you. Sure, let me address that first, you all.

And we're coming to the end of the Tdapha period at the end of this year. And that is certainly part of it. You look at the PPS. that had come out that's currently in comment stage where they're putting in place a quality measure, referred to as a QIP, equipped, And it's the first time certainly that I've seen in my career that there's a phosphorus quip there. We need to understand the implications of that QIP as well as this post-Hadapa period, how the DOs are reacting to that. There are some binders in development, obviously with some that are currently at the agency. We really want to see how that settles in. was a prudent approach to take a step back from the 750. We may come back with that, but I think it's going to be better informed with what we're going to see in the ensuing months with these transitions.

Yes, and the only thing I would add is, again, as I stated in my remarks, when we're looking at this guidance, we need a high degree of confidence in our ability to deliver that.

So, I think it was, you know, the prudent thing to do while we're looking at this, as Mike discussed. Yes, and then with regards to are we seeing this across the IBSC category? So, just remembering that our strategy is a bit different from the others. And so, just focusing on us, you know, what we've seen is just more stringent prior authorization criteria and ensuring that HCPs are adherent to that criteria. We've seen a bit of a shift there, as well as the, as well, as the step edits. And then in terms of how many payers we're seeing this across, it certainly is a meaningful amount to be able to influence the commercial landscape. And so for us, it was really important to dig into that to see what is the real impact to the business, do we understand it, and what are the actions we can put in place to be able to move forward and feel really good about what the team has been able put together there and certainly leading to the revised guidance and our plan for the back half of this year.

Okay, thank you. Our next question will come from Julian Harrison with BTIG.

Hi, thank you for taking the questions. First, with the updated guide, I'm wondering if you have any updated thoughts on the timeline to profitability. How should we be thinking about that? And then second, on CIC, I know we're around a year from top on phase three data, but would appreciate if you could help us start framing expectations for that data event? What would maybe be a win in your mind? And does CIC address well with your current sales force? Or are you maybe expanding into a broader call point there if the data are supportive?.

Yes, I think just a little bit on the second part of the question, and I'll ask you to address the 27 guide that we've just given. Certainly, there is great synergy with the Salesforce that we currently have, right? Those physicians see both IBSC and CIC patients. So that makes good sense. If there's a need to optimize the Salesforce as Eric has done historically, that's certainly something that we will consider. As we've talked about, all sites are up and running, enrollment's going great, and we're on track to deliver data and read that out in the timeframe that you just articulated.

And in terms of the profitability guide, as I have been continuing to say throughout the year, profitability is right around the corner. And when I think about the revenue growth expected, not only through the rest of this year, but as we continue into 27, we know that our cost structure will level out or begin to level out. So our top line will continue to grow faster. faster than OpEx and that's why I'm very confident in saying that we will be income positive next year. The other thing I would note is even through this year, as sales continue to grow, we are narrowing our losses in the path towards this profitability. Our Q1 loss, if you recall, was about $38 million. This quarter it's $16. It's less than it was this time last year. So we're really continuing to narrow that you can really see that path to profitability.

Thanks for the question, Julian.

And our next question will come from Caroline Palameke with Leidenberg.

Hi. Thanks for taking my question. So when thinking about coupons or discounting for product, if you implement that, what kind of impact you anticipate will have on GTN, or does the current guidance on GTN still stand? Thanks.

Yes, so our guidance on GTN, you know, we did take that into account in our total year guide. What I've been saying throughout the year is, you know, low to mid-30s, and that still continues to be the case. So we've taken, you know, all of the impacts into account. And, you know, when you really think about our GTN, it's impacted by mix certainly between government and commercial as well as the IRA inflation rebates and then our co-pay and our distribution discounts and things like that. All taken into account, Caroline.

Thanks. And this does conclude today's conference call. Thank you for joining. You may now disconnect.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Welcome to the Ardelyx First Quarter 2026 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to Lisa Caperelli, Senior Vice President of Corporate Communications and Investor Relations. Lisa, you may begin.

Thank you, Ross. Good afternoon, everyone, and welcome to our first quarter 2026 financial results and business update call. Earlier today, we issued our earnings release, which can be found on the Investors section of our website at ardelyx.com. Slides that accompany today's call can also be found on our website.

On today's call, I'm joined by Mike Raab, President and CEO of Ardelyx, who will share our Q1 progress towards our 2026 priorities. Eric Foster, Chief Commercial Officer, will provide an update on the performance of IBSRELA and XPHOZAH. And Sue Hohenleitner, our Chief Financial Officer, will provide some key highlights from our financial results.

Before we begin, I'd like to remind you that some of the statements made during the call today are forward-looking statements, which are subject to a number of risks and uncertainties that may cause our actual results to differ materially, including those described in our annual report on Form 10-K, our quarterly report on Form 10-Q, which was filed today and from time to time in our other documents filed with the SEC. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligations to do so even if our views change.

I will now pass the call over to Mike. Mike?

Thank you, Lisa. Good afternoon, everyone. It's great to be with all of you today. Before we dive in, I want to take a moment to welcome Lisa to the team. We're excited to have her on board leading our IR efforts as our new Head of Investor Relations.

2026 is poised to be another significant year of growth for our company, and we're already off to a great start. At Ardelyx, we're building an innovative pipeline of medicines for patients with unmet medical needs. Our first quarter's performance reinforces our confidence in the strategy we've laid out and in our ability to capture the opportunities ahead to create long-term value. As we build on this momentum, our focus is on executing on our 4 key priorities: accelerating the growth of IBSRELA, maintaining the XPHOZAH momentum, building and expanding our pipeline and delivering strong financial results.

Starting with IBSRELA. In the first quarter, our disciplined commercial execution drove 58% year-over-year revenue growth. With more than 7 million prescriptions written for IBS-C-indicated medicines last year, IBSRELA is well positioned as a differentiated mechanism for patients who continue to experience symptoms despite treatment with secretagogue. Our strategy continues to positively impact demand drivers. And today, IBSRELA is helping tens of thousands of patients with IBS-C, and we remain on track to deliver at least $1 billion in annual revenue in 2029.

With XPHOZAH, our patient-first strategy continues to guide our execution with demand growing. Today, more patients have access to XPHOZAH than ever before, and we remain committed to supporting patients irrespective of payer coverage.

Next, our pipeline. As a result of our performance and execution, we are at a stage where we have the financial flexibility to further invest in our pipeline, positioning our company for durable long-term growth. Earlier this year, we initiated the ACCEL trial, a Phase III clinical trial evaluating IBSRELA for chronic idiopathic constipation or CIC, as part of our efforts to expand our label and to reach more patients. This trial has rapidly gained attention from clinicians and patients alike. And all pre-identified sites have been initiated in under 4 months and are engaged in patient recruitment activities. We remain on track to complete enrollment by year-end and to announce top line data in the second half of 2027. If ACCEL reads positive, IBSRELA will expand treatment options for more patients. In addition, we have a strategy to expand the use of IBSRELA, which may help pediatric patients with IBS-C and has potential to extend tenapanor's patent life for an additional 6 months.

Our ongoing pediatric program consists of several studies evaluating IBSRELA in patients with IBS-C and functional constipation, pediatric equivalent of adult CIC. This effort is an example of our ongoing strategy to extend tenapanor, which includes our recently announced Orange Book listed 2099 patent covering the commercial formulations of IBSRELA and XPHOZAH, building additional value for these franchises. Also included in our pipeline is our development program for our next-generation NHE3 inhibitor, 531, which continues to progress through IND-enabling studies, building on our foundational experience in NHE3 inhibition. And 531 may extend our reach into other therapeutic areas, which will be driving additional value for shareholders.

We're excited for this next phase of Ardelyx's evolution as we execute on our pipeline and explore various external opportunities that align with our mission and core capabilities and meet our disciplined capital allocation approach. We've been growing our team at Ardelyx and now have a deep bench of talent at the executive level. I'm excited with the 2 newest additions who've joined the executive team, Felecia Ettenberg, our Chief Legal Officer; and Dr. Rajani Dinavahi, our Chief Medical Officer. Felecia's broad legal training and experience as a business partner as well as Rajani's experience in advancing innovative therapies from development to patients will be beneficial to Ardelyx as we build upon our commercial foundation, invest in our pipeline and focus on delivering meaningful outcomes for patients.

I'd also like to take a moment to thank Dr. Laura Williams, our Chief Patient Officer, who's been serving the dual role as CMO and CPO while helping to guide us on this journey and has done an outstanding job advancing our clinical programs. Thank you, Laura.

Finally, we remain in a position of financial strength. Our Q1 revenue performance position us to reiterate our previously communicated full year 2026 revenue guidance for IBSRELA and XPHOZAH. We have the flexibility to allocate capital to both near-term commercial execution and investments that will expand our pipeline to drive long-term growth value for the company, our patients and our shareholders. I am confident in our strategy and our team's ability to deliver on our key priorities. Together, we are advancing a growing, differentiated, innovative pipeline of medicines that address unmet patient needs.

And with that, I'm pleased to turn the call over to Eric to walk you through our commercial success. Eric?

Thank you, Mike. It's great to be with you all again. In Q1, we continued to build upon the incredible commercial momentum and execution and performance from last year. IBSRELA grew in total writers, new and refill prescriptions and total prescriptions year-over-year. For XPHOZAH, we continued to ensure patient access regardless of payer coverage, which drove an increase in total dispenses and paid prescriptions year-over-year. Our commercial team remains focused on expanding adoption among HCPs, creating greater brand awareness for patients and ensuring the fulfillment of written prescriptions. Our investments to improve the HCP and patient journey and expand access to our medicines have turned into consistent year-over-year growth for both IBSRELA and XPHOZAH.

Let me start with IBSRELA. IBSRELA continues to be our main revenue driver, and our commercial execution generated 58% product revenue growth year-over-year. During the quarter, we saw robust demand trends, notwithstanding expected first quarter market dynamics and temporary disruption from 2 severe winter storms. Our growth in demand is a result of our efforts to capture more of the IBS-C market in 2026 by driving IBSRELA as the first-line therapy following a secretagogue failure. IBSRELA is a first-in-class innovative medicine with a winning and sustainable position in a growing market with nearly 7 million prescriptions written last year. Through research, we know that as many as 77% of patients on a secretagogue continue to experience symptoms despite treatment, demonstrating a high unmet medical need for additional options.

I'll now walk you through our key demand drivers, which include growing both breadth and depth of writing, increasing patient activation; and lastly, improving prescription pull-through and fulfillment. Beginning with growing breadth and depth of writing. We are focusing on high-writing health care providers who are responsible for approximately 50% of the IBS-C total prescriptions, and our field sales team is driving greater reach across those targets. These efforts resulted in an increase in the number of writers in Q1, underscoring the effectiveness of our commercial activities. We are also seeing deeper prescribing within existing accounts.

When an HCP is familiar with the access path and sees positive patient experiences, they are more likely to prescribe IBSRELA more broadly. Our in-market messaging focused on IBSRELA's differentiated mechanism of action and its established safety and efficacy profile is resonating and continuing to drive HCPs to prescribe IBSRELA. With respect to patients, the IBS-C population is highly engaged in managing their condition. As awareness of IBSRELA's effectiveness and safety increases, patients are more likely to initiate conversations with their physicians, which in most cases, results in a prescription.

We continue to focus on identifying and reaching patients through multifaceted marketing efforts. We are currently seeing robust engagement across digital and social channels, while we continue to explore new channels to reach and engage with the sizable IBS-C patient population looking for something different. One such initiative is through our partnership with the LPGA, where we will educate, empower and mobilize patients to take control of their IBS-C by seeking new information and talking to their doctor about their symptoms and the treatment options that are available. We chose to partner with the LPGA due to their clear strategic alignment between the LPGA's legacy of empowering women and Ardelyx mission to empower patients to proactively manage their health. Patients deserve open dialogue about their symptoms and their options, and we are excited to partner with the LPGA to accomplish this goal.

Lastly, our full commercial organization is focused on driving prescription pull-through to help ensure that all patients prescribed IBSRELA get on treatment. Based on prior success, we are increasing the presence of our field reimbursement managers who support patient access. This team is talking directly to prescribers and supporting them with account education and patient pull-through to improve patient access. To drive further adoption, we are continuing to encourage HCPs to send prescriptions to the IBSRELA Pharmacy network, a limited group of specialty pharmacies that offer a patient-centric, high-touch experience and who are best equipped to handle prior authorizations and the payer hurdles that can restrict patient access.

As prescriptions go through our specialty pharmacy network, fulfillment rates are higher, and we see on average an additional refill per year for patients. This is a high-value opportunity that we will continue to help achieve our projected revenue growth. We are united in our purpose to make a meaningful difference to patients impacted by IBS-C, and we are moving with urgency to capture the opportunities ahead and realize our full potential.

Moving on to XPHOZAH. Our high-performing patient-focused XPHOZAH team is committed to achieving the full potential of XPHOZAH and bringing this important medicine to patients in need. I continue to be proud of the team's ability to improve patient access and drive growth. As a result, we saw an increase in total dispenses by 32% and paid prescriptions by 19% compared to the same quarter in 2025, which is important as the overall prescription market declined by 10% over the same time period.

We are broadening our reach by employing targeted sales initiatives and a cross-channel strategy to increase HCP and patient engagement. We saw solid growth across key metrics in Q1 with notable increases in total writers, new and refill prescriptions and total prescriptions across the non-Medicare segments compared to the same time period last year. This growth shows progress against our key strategic initiatives, which includes optimized HCP targeting and enhanced access messaging to support pull-through.

XPHOZAH continues to be an important contributor for Ardelyx, and we remain focused on supporting and ensuring access for all patients regardless of payer coverage. With the majority of patients treated with binders not having fully controlled phosphorus, the high unmet need is clear. I'm confident in the team's ability to deliver on our priorities for both IBSRELA and XPHOZAH this year. The entire organization is executing incredibly well at a high level in a fast-paced environment, consistently achieving our shared goals as a result. At the same time, we are making prudent investments across the commercial organization to strengthen our position in the market, support patients along their journey and accelerate long-term growth.

I will now turn it over to Sue. Sue?

Thank you, Eric. As you heard from Mike and Eric, we are continuing to advance our commercial momentum to drive significant value creation. We are leveraging disciplined capital allocation into a clear strategic advantage by investing with purpose and commercial growth and building our pipeline. We are driving towards profitability and meaningful cash generation, allowing us to strengthen our balance sheet, invest in growth and build long-term shareholder value.

Now let me walk you through the financials. Our quarter-over-quarter total product revenues were $93.4 million compared to $67.8 million in the same period last year, representing 38% growth. That growth was driven by a significant increase in IBSRELA demand with Q1 2026 revenues of $70.1 million, an increase of 58% compared to Q1 of 2025. The Q1 2026 demand for IBSRELA increased despite the expected Q1 seasonal dynamics that were further exacerbated by the winter storm. We continue to expect IBSRELA revenues to grow quarter-over-quarter for the remainder of the year.

Revenue for XPHOZAH during the first quarter of 2026 was $23.3 million and on an as-reported basis remained consistent with the prior year revenue. However, it's important to understand the underlying business results we're seeing. As you may recall, in Q1 2025, we recorded a $3.8 million favorable adjustment related to product returns. Taking that adjustment into account, our paid prescriptions of XPHOZAH revenue actually grew 19% year-over-year.

Now turning to expenses. R&D expenses for the first quarter of 2026 were $20.2 million compared to $14.9 million for the same period in 2025. This increase primarily reflects development activities for the ACCEL Phase III trial for CIC. SG&A expenses were $102.3 million for the first quarter of 2026 compared to $83.2 million for the same period in 2025. This increase was reflective of the ongoing investments to drive commercialization demand and adoption of IBSRELA.

Our net loss for the first quarter of 2026 was $37.6 million or a loss of $0.15 per share compared to a net loss of $41.1 million or $0.17 per share for the same period in 2025. The net loss for Q1 2026 included $14.2 million for non-cash expenses from share-based compensation compared to $12.1 million for the same period in 2025. We are in a position of financial strength with $238.1 million in total cash, cash equivalents and short-term investments as of the end of the first quarter.

To capitalize on the favorable market conditions, we recently refinanced our existing debt with SLR. You may recall, we entered into a loan agreement with SLR in 2022 that provided a total of $300 million of cash, which $200 million have been drawn down. The remaining $100 million of cash is available for drawdown this year. We are pleased with the positive outcome of this refinancing with SLR, which extended the maturity and interest-only period of our loan by 2 years and lowered our overall cost of capital and annual interest expenses throughout the term of the loan.

Now turning to guidance for 2026. We are reiterating our 2026 revenue guidance for IBSRELA between $410 million and $430 million. That represents a 50% to 57% year-over-year growth. We expect the growth to be driven by quarter-over-quarter increases in demand, along with improved prescription pull-through. Our long-term growth expectation for IBSRELA remains to reach at least $1 billion in 2029, representing a 38% CAGR.

Now turning to XPHOZAH. We are reiterating our revenue guidance between $110 million and $120 million in 2026. We continue to invest at an appropriate level to ensure that XPHOZAH remains a contributor of financial growth for Ardelyx. Our full year product revenues are expected to grow between 38% and 46%, outpacing our operational expenses, which will grow by approximately 25%, consistent with prior guidance. We are at a stage in our development where it's necessary for us to prudently invest in our growth accelerators, our commercial operations and our pipeline, all of which require high-impact investments in R&D and SG&A.

In 2025, we grew our cash balance year-over-year even as we increased investment in both commercial execution and pipeline development. As we transition into more steady and measurable cash flow positivity in the near future, I think it's important to begin to share our capital allocation priorities as we head into this new era. Our priorities include: one, accelerating IBSRELA growth as this is our highest ROI use of capital today; two, investing in our current pipeline to create additional growth drivers and expand with external business development opportunities; and three, maintain our financial strength. Importantly, we are funding current operations and pipeline from our revenue base, which demonstrates the growing financial maturity of Ardelyx.

In addition, as I stated previously, we have proactively refinanced our debt and reduced our cost of capital while preserving optionality for BD, partnerships or other future opportunities. Ultimately, all of this builds towards sustainable profitability. We hope this view of our capital allocation priorities is helpful as you continue to support the strategic value of Ardelyx now and as we evolve into the future.

With that, I'll hand it back to Mike.

Thank you, Sue. As you heard, we're focused on executing on our priorities, significantly grow IBSRELA, maintain XPHOZAH momentum, further advance our pipeline and continue delivering strong financial results. We are moving with purpose, urgency and discipline against these priorities, and we look forward to demonstrating continued progress as the year unfolds.

To our investors and employees and especially the patients, thank you for your continued engagement and support. We're encouraged by the progress we've made and excited about the opportunities ahead. We remain focused on disciplined execution, long-term value creation, and we appreciate your continued confidence as we move forward.

And with that, we'll open the call for questions. Operator?

[Operator Instructions] And our first question comes from Roanna Ruiz from Leerink Partners.

A couple for me. First one, I thought it was interesting, you mentioned IBSRELA demand increased despite the storms and seasonality. How should that flow through to the next quarters and in light of your current guidance?

Sure. I'll ask Eric to comment a bit on it. But for us, seeing what we all went through in the first quarter, which is normal seasonality in those 2 storms, seeing that continued growth in demand only strengthens our conviction in terms of where we're seeing this business grow and very, very pleased with those results. Eric, anything to add?

Yes. Thanks, Roanna, for the question. Very pleased with what we saw in terms of demand in Q1 and very similar to the patterns that we've seen in the past. We expect to continue to see quarter-over-quarter growth as we move forward. I feel very confident with the team that we have in place and continuing to invest in access and making sure that all patients that are written a prescription can get fulfillment. So I feel very comfortable about the strategy that we have in place and our ability to be able to continue the strong execution, and you should see that continue to grow as we move through the year.

Great. And the other question I had, I was curious about any color you could share about OpEx throughout 2026? How should we think about this with the Phase III CIC study ramping up as well?

Sue?

Yes. Thanks, Roanna. Yes, I would say that we've said before we were going to guide and we are up to about $520 million in total OpEx, and that would be consistent throughout the quarters. So you saw in the first quarter that we recorded about $122 million of that OpEx expense. So what I would see is a bit of a ramp-up then as we move through. And yes, as we continue to enroll the patients in the study, you will see more of those expenses come through the rest of the year.

And then to be clear, that was all factored into the guidance that we gave, the expectation of the spend that we would have on CIC.

And our next question comes from Yigal from Citi.

This is Jin-Wook Kim on for Yigal. Congrats on the progress. Maybe just a quick one from us. As you track towards your December enrollment completion target for the Phase III CIC trial, can you provide any color on the pace of enrollment relative to internal expectations so far? And are there any learnings from the IBS-C TEMPO enrollment experience that are helping you optimize recruitment?

Interesting question with regards to TEMPO. As I stated in my comments that we have all the preconceived sites up and running, right? And that pace of enrollment of the sites was wonderful to see and it was on par with what we expected out of the TEMPO program. As I also noted, the enthusiasm both by treating physicians and patients is evident, and that enrollment continues at pace. So we're very confident with the time frame that we have shared where we'd be able to expect both for it to be completed and the data to be shared.

And our next question comes from Dennis Ding from Jefferies & Company.

I had several questions around IBSRELA. So number one, so Q1 has some seasonality. And on a quarter-over-quarter basis, there was a bigger step down relative to last year, which is totally fine because it's a bigger base. But in terms of the recovery, should we also expect a bigger recovery than what we saw last year as well? I believe consensus for Q2 assumes about like a $30 million quarter-over-quarter recovery for Q2.

Question number two, just specifically around the specialty pharmacy dynamic. Can you share if that shift away from retail is working out in terms of better fill and reauthorization rates relative to last year? The channel is around 30% of the mix, but how much higher can that go? And then I have one more follow-up.

All right. Let me just quickly address some of those and I'll ask Eric to comment. I think the Q2 recovery, I think, rather than recovery is just a normal course of business. And I think that term is an important one to think about. It's what we expect and what we plan for given the predicted and expected dynamics that everyone sees in Q1. Now the surprise was the storm, the 2 storms, both the Mid-Atlantic one and the in the Northeast. And that clearly had a meaningful impact in that sector of the country. And if you think about where many distribution centers are, they were smacked out in the middle of Ohio River Valley, where much of that was hit.

So one can't predict. We're not weather people and they are wrong 50% of the time at least. So we don't try to predict storms, but it is one thing that's notable. I'm very confident with the data that you show every week, that we're on the path to what we expected out of Q2. And I do think, again, just to reemphasize, it's not a recovery rather just the pattern of the business.

I'll ask Eric to comment a little bit more on that in terms of what they saw in the field. But the IPN, IBSRELA Pharmacy Network, is a fundamental important part of our strategy moving forward, given Eric's comments in his opening statements. It is better for patients. And I'll let him talk about the dynamics in terms of the shift. And I think at this point, it's early for us to say what we think the ultimate potential of percentage of the business that would go through that. It's probably a little bit too much to tell that will become evident through the data that we know is imperfect, but that will become evident over time. Eric?

Yes. Thanks, Mike, and thanks for the question, Dennis. As far as Q1 goes, we had talked about the seasonality. And as Mike said, for us, we've got the experience and the knowledge to know most of that that's coming. What we were not aware of, obviously, were the storms. So we feel like the team planned accordingly. We were able to push through the temporary disruption there. And just like we saw last year, we really started to see the acceleration in the back half of the quarter, and we certainly see that, which gives us great confidence as we moved into Q2.

With regards to the IBSRELA Pharmacy Network, we continued to be very excited about that opportunity and really to bring IBSRELA to patients that are prescribed IBSRELA. So if we think about the fulfillment rate, and your question around, is there better fulfillment, absolutely, there is when it goes to the IBSRELA Pharmacy Network. And that's really the driver for us to make sure that patients that are prescribed IBSRELA can get access to the treatment. So we'll continue to work on moving business into the IBSRELA Pharmacy Network. We expect that to continue through the year.

And also, it's important to note, when that happens, there is an additional on average prescription written or refill written in that year. So it's really great for patients. You get a higher fulfillment rate, you get better refill rate as those prescriptions go through the IBSRELA Pharmacy Network.

Yes. And the one thing I would add, Dennis, you kind of talked about the guidance. I think we were pretty overt about Q1 with kind of a soft guide, but that was all factored into our full year, and that's all factored into our full year guidance. But we aren't going to provide similar color. We felt like that was appropriate for Q1 just given the storms and some of the volatility. But I think as we go forward, as we said, we're going to continue to grow quarter-over-quarter.

Okay, perfect. And then as my follow-up. So Lilly is running a Phase II with its GIPR agonist for IBS-C, data might be in 2027. So I'm curious how you're thinking about that study and the durability of the IBSRELA franchise over the long term in 2030 going to be well north of $1 billion in revenue?

Yes. I mean, I think for us, what we need to do is follow the data. And anything that helps patients is a good thing. I think that is just a fundamental way that we and I look at this business. Anything that's going to help patients is the right thing to do. The realities are, if you look at the potential patients that could, should or might be taking GLP-1s, it's a relatively small percentage who actually are versus those who would benefit from it. So I wouldn't imagine there's going to be a massive degradation of the market given the positioning that we have for IBSRELA in that market. I don't see that as a massive threat on the horizon. Is it better for patients if it works? Of course, it is, and that's something we should all cheer.

And our next question comes from Chris Raymond from Raymond James.

So we've talked to some KOLs who indicate they're already using IBSRELA to some extent in CIC. Mike, I know you don't want to -- you're not going to want to give too much color here, but just maybe in broad strokes, can you guys talk maybe about what kind of CIC use you're seeing in the field? I mean, Linzess, Trulance, Amitiza, they all have CIC on their labels already. So maybe a second part of that question is, would the competitive dynamic in this indication be maybe similar to what we've seen with IBS-C or are you thinking something different?

So yes, what's important about what you said is all the others have dual indication. And clearly, we have heard and understand what you've described as well in your KOL clinician discussions. As you know, physicians in the art of what they practice can prescribe things off label. We cannot promote things off label, and we won't and don't. That is a fundamental part of this business as everyone understands. If a physician feels it's appropriate for CIC, they should.

And what's really interesting, if you haven't looked at Rome V, which was just published, the changing definition of CIC, functional constipation, IBS-C, which we know given our experiences on the front lines, is a continuum of care. And understanding how the Rome Foundation has evolved its definitions is one of the fundamental reasons why we moved into the CIC program is it's a natural course.

And I think as we've spoken over the years, would we have loved to had both indications at launch, of course. But as you know, I'm cheap and we didn't have the money to invest in both indications. And now that we are in a place that we can, we are to provide those benefits and try to eliminate some of the barriers in the way that physicians think about this and the further hurdles that the prior authorizations will put them through if it's an off-label indication. So I agree with everything that is the genesis of your question. And I think what we're doing with the CIC program is specifically designed to address that, coupled with what's happened with Rome V.

And our next question comes from Allison Bratzel from Piper Sandler & Company.

This is Ashley on for Ally. Congrats on the quarter and all the progress made. So just 2 questions from us. You talked about it in your prepared remarks, but could you talk a little more about the IBSRELA pediatric trials and just the workings of the potential 6 months of additional patent life and how meaningful those additional 6 months could be for IBSRELA? And then also just wondering, once the IND is filed, do you have any line of sight into time lines around getting 531 into the clinic? And how quickly do you plan to move if the IND studies are positive?

We will work at pace if those studies are positive because it's the right thing to do. But fundamental, again, to what we do is we follow the data. And all this pre-IND work is really critical for us to understand. Remember, Ashley, let me remind you that when we created tenapanor back in 2009, it was based upon a huge amount of preclinical work that we had done to understand all aspects of where this molecule engages certainly with animal models and ultimately into man. So we have good experience in this, and there are very tried and true approaches that one takes in order to make the decision to or not to file an IND. And the data tell us what the right thing is to do.

With regards to the pediatric indication, this is a tried and true practice that everyone does in the industry. One of the things that the FDA put in place was the pediatric act to encourage companies to develop drugs for the pediatric populations. Now it is pretty hard in IBS-C given different age groups, the inability or challenge to describe pain, it's subjective. So it's a harder population. It's a smaller population. But the mere operational effort to put this in place primarily to show safety is one of the fundamental tenets of pediatric development is it allows you flexibility to treat the younger patients if you demonstrate the safety that we expect to demonstrate given our long history of utility of this molecule.

So the benefit of that 6 months, you look at whatever peak it is that you guys have modeled, just look at each incremental month of value that, that will generate and that will tell you the value in your modeling of what those 6 months are worth. It's significant.

And our next question comes from Joseph Thome from TD Cowen.

Maybe a little bit of extension of a prior question, but can you walk through the physician touch point differences between CIC and IBS constipation? I guess, if you are successful in CIC, would you need to go a little bit more maybe into a primary care segment or anything like that with your sales force or by the time they're presenting to the level of getting IBSRELA, they may be in a GI office? Anything around that would be helpful. And then you mentioned a couple of times, obviously, on the call, can you talk a little bit about the company's willingness to maybe lever up the balance sheet given what your expectations are for the growth of IBSRELA to do something maybe a little bit larger in size?

Sure. Let me address the first one and then ask Eric to comment, too, is I think as we said when we announced the ACCEL program is the CIC market is significantly larger than the IBS-C market. However, the vast majority of those patients are effectively treated with over-the-counter medications. So I think that's an important distinction as you look at the epi in these populations as to what the differences are and not get over your skis in terms of what that market sizing might be because it's an important distinction of those that are not served by OTC meds are the ones that end up going and being referred to other offices.

And Eric, do you want to comment a little bit on what we would do in the field, if anything, differences?

Yes. Thanks, Joe, for the question. So as you know, today, we focus on high-writing GIs, APPs and high-writing non-GIs. So that does put us in more of the primary care setting and feel really confident about the targeting that we have right now for IBS-C, and you can see a lot of the great momentum that we have.

With regards to CIC, I do think you're correct. As Mike mentioned, it is a bit of a larger patient population, and we do see and expect more patients to be going to their primary care. So at some point, as we're continuing to look at that patient population and making sure that we have the right reach, we'll make that decision at that time. But certainly, I can see that there is more utilization in the primary care market, and that's something that we definitely will consider as we look at the rightsizing of the team as we get closer to product being approved in the market.

And Joe, I think a fundamental part of that is, Eric has talked about this in the past, we call on 50% of the HCPs today that write for IBS-C and frankly, CIC indicated drugs alike, and that's the 14,000 HCPs. The other 50% is 182,000 HCPs, and we're not going to cover them all, right? So it's going to be an optimization of those who might be writing disproportionately amount for CIC, which you can find through the data. But a little bit of a cautionary note not to take this as though we're going to double or triple the size of the organization, but rather an optimization as you've seen us do this year.

With regards to levering the balance sheet, we're at such an incredible pivotal time for the evolution of the company, where not really reading between the lines, Sue has said explicitly, we're going to generate more top line than expense. So that journey that we're on, that horizon is not that far away with what we're trying to do. So I'll ask Sue to comment. I'm not sure how much leverage is needed versus execution in the way we're doing. But certainly, we're not afraid of doing the right thing for opportunities that present themselves.

Yes. And as Joe, you heard that we already did do a refinance of our debt. We still have access to an extra $100 million of that loan. So we've got that. We've got plenty of options to do that if and when it's necessary or a great opportunity presents itself.

And our next question comes from Laura Chico from Wedbush Securities.

Three for me. First, I thought I heard Eric mention an expansion of the field manager level. And I'm just trying to understand if that's more impactful on the depth of prescribing or the breadth of prescribing? And which of those 2 levers impacts hitting the upper range of guidance or kind of impacts the guidance swing there? And I have 2 quick follow-ups.

Yes. Thanks for the question, Laura. So I hate to say, but both actually. It's very hard getting the physician to write that first prescription. And so we want to make sure when they write the prescription that they have confidence that it will be filled. And that's what the field reimbursement manager does. They work with the physician's office to ensure as they navigate the payer dynamics that they're able to pull through and get that prescription filled.

With regards to physicians as they continue to increase their depth of prescribing, that same confidence is important that not just the first one goes through, but subsequent ones. So that team is really focused on helping the prescriptions get pulled through, whether it's the first prescription or subsequent ones. I think you heard me say in my prepared remarks, we saw increase in writers as well as increase in depth of prescribing as well. So we are having impact across both of them, and that's why I kind of go to both of them to say that it's important to make it happen across both.

Laura, when Eric first started talking about hiring the skill set, one of the things that really opened my eyes is really a very simple example. If I'm a salesperson, I worry that, that script is going to be filled. That's the way you're going to compensate me. So if I'm spending my time looking at Dr. Foster and whether or not that script is actually getting filled, I'm not calling on Dr. Raab because I'm worried about that. So bringing on the field access managers allows the ABDs to have confidence that they can drive the top of the funnel and that there will be those there to help pull through at the bottom of the funnel, resulting in compensation ultimately in incentive comp, right? So it is -- I don't think I would ever imagine not having both in the launch of a drug going forward.

Okay. And I guess 2 quick follow-ups then kind of related to that. I think in the prepared remarks, I heard that the XPHOZAH paid rate was also up. Just curious if you could quantify that. And then with respect to ACCEL, the site activation on the pre-identified sites has moved really rapidly. How are you monitoring, I guess, any conversation around quality checks that you can do to ensure you're getting the sites to adhere to protocols and recruiting the right patients would be helpful? But also, what are your assumptions around discontinuation rates?

Once the site is up and running, we don't pay any attention to it. No, you're right. I mean for the quality of the patients, it's really, really important, right? And as you get the enthusiasm of start-up, there's training and reminding people of why you started in any clinical trial, you have screen failures that happen and then the sites get better and better at identifying the patients. So that's just a natural progression of clinical development and recruitment.

So Rajani, a couple of weeks now on to the job is into this with both feet and both arms, and we all feel very good about both the quality of the sites as well as those sites learn and get better at enrollment that we see those failure rates begin to taper, which is something you factor into your projections of how you enroll. So I think we all feel very good about what we've said, and ultimately, the quality of the patients are going to be there defined by our inclusion/exclusion criteria. So we feel very good about that quality that Rajani's team is ultimately and our CRO is following through with.

And with regards to your first question, I think what's important is on a GAAP basis, of course, the year-over-year quarters look similar. It is so important what Sue reminded everyone is that $3.8 million return reserve reversal that we did in Q1 should be excluded as you look at the base business that we've defined, which is a non-Medicare business, which grew by 19%.

And if you look at our sequential growth, even since we started in this effort to not participate in TDAPA because we believe what we are now seeing is ultimately what was going to be true, is proving out. And the growth that we're seeing in that non-Medicare segment with all the challenges that dialysis organizations are facing further emphasizes the value of this program and the product for patients in the phosphorus management. So it's an opaque and difficult business that we've chosen to partake in the way that we have. But the numbers are showing that actually we're helping the patients that we anticipated that we would.

And our next question comes from Prakhar Agrawal from Cantor Fitzgerald.

Congrats on the quarter as well. Maybe firstly, on XPHOZAH, maybe I missed this, but I did not hear you reiterate the long-term guide of $750 million. I know the Street is a little bit more conservative, but I just wanted to check if you are reiterating that. And you talked about investing in high-value opportunities as well. So has there been a change in the level of investments for XPHOZAH this year and maybe in the future, too? Secondly, maybe if you can talk about the gross to net for both products for 1Q and trends for the rest of the year? And last question, given the investments you are making both on the R&D side and SG&A, how should we think about the cash flow profitability?

Thanks, Prakhar. That's a lot for me. So let's see if I can hit it all. So in terms of the high-value opportunities with XPHOZAH, yes, we ensure that XPHOZAH continues to be a contributor. So we don't necessarily tease out separate product P&L. But rest assured, we continue to ensure that all of the spending that's done and the investments we make behind those patients and that growth makes them a financial contributor. So that's good.

In terms of the GTN, you probably saw in what we filed, we're a little over 36.4% of GTN, and that's a blend. We don't necessarily split that out. And what I'd say is first quarter is going to be really probably your highest quarter in terms of GTN, just given all the dynamics with co-pay assistance, et cetera. So -- and what we've always said before is it's about low-30s when you think about a blended total GTN rate for the year. So -- but I would say that -- so you'll see that high in Q1 and then kind of taper off as we go into further quarters. Before I leave XPHOZAH, yes, we will reiterate the $750 million, and I am reiterating that. So within the guidance, we've given $1 billion for IBSRELA and the $750 million for XPHOZAH.

In terms of R&D and SG&A, it was more around the expenses for the rest of the year. Yes. So I would say -- and with cash flow, it is something that we're continuing to monitor. As you can see with the top line guide, being $520 million to $550 million and our OpEx only at $520 million, there is a possibility we'll get to cash flow positivity. But certainly, we want to continue to see how the year unfolds and make sure that we're hitting on all cylinders. And then we will likely come back with an update if it's appropriate on cash flow.

We appreciate the question of wanting trajectory quarter-to-quarter, but we're not going to get into the practice of quarter guidance. I think the yearly guidance that Sue just went through is really important.

And our next question comes from Matthew Caufield from H.C. Wainwright.

With the investor focus on sales execution, is there further granularity that you could share on IBSRELA growth between the new patient starts versus refill persistence trends? And then where things may stand presently for the total penetration among target prescribers there? Just thanks for any color there on execution overall.

Yes. I think that's getting into detail that we probably wouldn't get into specifics on. You can begin to look through your script data in terms of NRxs versus TRxs and tease that out to some extent with what you do. I recognize that it's going to be imperfect data. But suffice it to say, with Eric's prepared remarks that we're seeing both with the other question that was asked, breadth and depth. So we're seeing great refills and we're seeing lots of new prescriptions coming through as well.

Eric, anything to add?

No.

And our next question comes from Julian Harrison from BTIG.

This is Andrew Kassin on for Julian. Congratulations on the results this quarter. On IBSRELA, which are the growth drivers would you say do you believe still has the most room to grow writers, new prescriptions, refill or pull-through?

I think Eric will probably say yes. It's all of the above. I think what's interesting is for the 7 million prescriptions for IBS-C-indicated products that I referenced in my opening remarks, it's a very small percentage of the market that one needs to penetrate in order to get to our guidance of peak. So there is massive opportunity out there.

And I think, Eric, any granularity around the specifics would be great.

Sure. Yes, I'm very excited about all of them as you list them. So as we think about the IBSRELA opportunity, as Mike said, there are 7 million prescriptions written for IBS-C on an annual basis, and we continue to see that market grow. We feel very confident in the position that we have, a winning position sustainable over time that we've had for the past 3 years. And we continue to see an increase in writers, total writers, new writers as well as depth of prescribing, and that's really important.

So what that tells you is physicians continue to have confidence in IBSRELA and look at it as a viable option for their patients that are in need. So of those patients, we know that 77% continue to have symptoms despite treatment with a secretagogue. So very healthy market, strong position for IBSRELA, continuing to go writers as well as depth of prescribing and feel really good about the opportunity we have moving forward.

When you think about the IBSRELA Pharmacy Network and being able to improve the fulfillment rate as well as the number of refills for patients, it really is -- really leads to success across the business in those important drivers of the business. And that's really what gives us that confidence to that $1 billion in 2029 and beyond.

There are no further questions at this time. This now concludes today's conference call. Thank you for joining. You may now disconnect.

Welcome to the Ardelyx Fourth Quarter 2025 Earnings Conference.

[Operator Instructions]

I would now like to turn the conference over to Caitlin Lowie, Vice President of Corporate Communications and Investor Relations. Caitlin, you may begin.

Thank you. Good afternoon, and welcome to our fourth quarter and full year 2025 financial results call. During this call, we will refer to the press release issued earlier today, which is available on the Investors section of the company's website at ardelyx.com.

Please note that we are also including a slide presentation to accompany today's remarks. You can view the material by accessing the webcast version of today's call on the Investors section of ardelyx.com.

During this call, we will be making forward-looking statements that are subject to risks and uncertainties. Our actual results may differ significantly from those described. We encourage you to review the risk factors in our most recent annual report on Form 10-K that will be filed today and can be found on our website at ardelyx.com.

While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so even if our views change. Our President and CEO, Mike Raab, will begin today's call with opening remarks followed by Eric Foster, Chief Commercial Officer, who will provide an update on the performance of IBSRELA and XPHOZAH. Dr. Laura Williams, our Chief Patient Officer and Interim Chief Medical Officer, will share an update on our recently announced development program before our Chief Financial Officer, Sue Hohenleitner, reviews the company's financial performance. We will then open the call to questions.

With that, let me pass the call over to Mike.

Thank you, Caitlin, and good afternoon, everyone. It's great to be with all of you here today. 2025 was an extraordinary year for the company as the team delivered on every single one of our strategic priorities. That performance establishes a strong foundation for what we will accomplish in 2026. We will continue growing XPHOZAH/IBSRELA and execute on our growth initiatives. What we've accomplished over these past 12 months is remarkable.

We delivered on all 4 of our key strategic priorities, accelerating IBSRELA growth momentum, executing on our XPHOZAH strategy, building a pipeline focused on addressing areas of unmet patient need and delivering strong financial performance.

First, IBSRELA has proven to be a critical growth engine for the company and is a powerful example of our disciplined execution and our conviction in the benefit that a first-in-class medicine can offer IBS-C patients. IBSRELA is now helping tens of thousands of patients, evidenced by the incredible revenue growth of 73% compared to 2024 and 61% year-over-year growth in the fourth quarter.

Second, 18 months ago, we made the decision to preserve access to XPHOZAH for all appropriate patients as we recognize at a core foundational level that staying true to our principles and doing what is best for patients will result in doing what's best for the company.

Today, I can tell you that our patient-first strategy is working. More patients now have access to XPHOZAH than ever before, and we're confident in our growth expectations. An additional development from just a few weeks ago was the issuance of a new patent for the commercial formulations of IBSRELA and XPHOZAH that expires in 2042 and is now listed in the Orange Book at the FDA.

This patent is an important component of our strategy to create additional valuable intellectual property to support IBSRELA and XPHOZAH. Our job is to maximize the value of these franchises by building a comprehensive IP portfolio, and this patent is an important step in just doing that. Third, we launched 2 development programs, which along with our IBSRELA pediatric program, exemplify how we plan to build out our portfolio, develop and commercialize innovative medicines for patients with unmet needs that align with our long-term strategy, leverage our internal core competencies that reflect thoughtful use of our financial resources to create durable long-term shareholder value.

In the fourth quarter, we announced that our Phase III program to expand the IBSRELA label to include chronic idiopathic constipation or CIC. Assuming addition of this indication, IBSRELA would be better aligned with real-world prescribing habits, allowing us to be more comprehensive in our messaging, serve more patients and increase the scale and the opportunity for IBSRELA.

As well, we announced the commencement of the development program for our next-generation NHE3 inhibitor, RDX-10531, which we refer to as 531. Building on our foundational expertise in NHE3 inhibition, 531 presents us with the opportunity to potentially extend our reach into new therapeutic areas.

Finally, coupled with this extraordinary performance is continued disciplined cash management and execution, resulting with ending 2025 in a stronger financial position than was the case at the end of 2024. We made bold patient-centric decisions in complex market environments.

We strengthened our leadership team to pursue our growth aspirations, and we positioned Ardelyx for long-term growth and value creation. We are in a great position. I'm excited about where we're going and our ability to identify and capitalize on the opportunities ahead.

In 2026, we will elevate our organization to even higher levels. Our priorities haven't changed, but our expectations for them have. We're delivering on our vision for what the future of Ardelyx is becoming a consequential patient-centric enterprise built on a broad, thoughtful portfolio of best-in-class medicines.

We are focused on significantly growing IBSRELA and maintaining XPHOZAH's momentum. With the guidance we shared in January, IBSRELA is clearly demonstrating its blockbuster potential and is on track to deliver $1 billion in revenue in 2029 with significant growth thereafter.

IBSRELA is a powerful engine for the company. We are determined and extremely excited about our future and the many opportunities ahead. Our confidence is high, and we have the leadership, the team, the strategy and the urgency to execute and achieve these goals. With that, I'm turning the call to Eric, Laura and Sue to walk you through specific drivers and our outlook in more detail. Eric?

Thank you, Mike. It's great to be with you all again. 2025 was an outstanding year. It was marked with incredible commercial execution and performance. We grew IBSRELA by more than 70% versus the prior year with record highs across all key performance metrics.

For XPHOZAH, we ensured patient access continued, and we increased total dispenses year-over-year. Our teams drove clinical conviction among HCPs, created greater brand awareness for patients and ensured the prescriptions that were written were filled.

We thoughtfully invested across the commercial organization to improve the patient and HCP journey and accelerate access to our medicines. Those investments turned into consistent quarter-over-quarter growth for both IBSRELA and XPHOZAH and set the stage for what will be an important growth year in 2026.

Let me start with IBSRELA. We reported an incredibly strong year in 2025, generating 73% growth over 2024. In Q4, we delivered our highest net revenue and strongest demand quarter since launch.

Our strategy is sound and led to record growth in 2025. IBSRELA is a first-in-class medicine with a winning and sustainable position among patients who continue to experience symptoms despite treatment with the secretagogue. And there are many patients who continue to experience symptoms and need a different option.

The IBS-C market is robust and continues to grow double digits with nearly 7 million prescriptions written in 2025, an increase of 11% compared to 2024. As much as 77% of patients on the secretagogue, report that they continue to experience symptoms despite treatment.

Our strategy, increasing depth and breadth of writing, strengthening our engagement with patients and supporting prescription pull-through drove notable increases in new and total writers as well as new and refill prescriptions. In the fourth quarter, we finished the year with a record high number of total writers and new and refill prescriptions.

We are confident we have the right levers to drive significant demand. To allow us to capture more of the IBS-C market in 2026 and well into the future, we are investing in 3 key areas.

First, the prescriber continues to be a key focus. We continually optimize our field sales team to drive greater reach and frequency with our target, high-writing health care providers who represent approximately 50% of the IBS-C total prescription market.

That optimization allows us to continue to grow the prescriber base and expand the depth of prescribing. Our in-market messaging remains focused on IBSRELA's differentiated mechanism of action and its strong clinical profile.

Our message is resonating in driving HCPs to prescribe IBSRELA. Second, we're planning to double down on the high-impact investments we made last year to improve our prescription pull-through. We are increasing the presence of our field reimbursement managers to support patient access and brought significant value to our performance last year. We will also be encouraging HCPs to send prescriptions to the IBSRELA pharmacy network, a limited group of specialty pharmacies that offer a patient-centric, high-touch experience who are more equipped to handle prior authorizations and the payer hurdles that restrict patient access.

When prescriptions go through a specialty pharmacy, fulfillment rates are higher, and we see on average an additional prescription per year for patients. This is a high-value opportunity that we will continue to invest in. And third, the patient. Patients with IBS-C are highly active in their health, well-being and condition. Our research has demonstrated that when patients are introduced to IBSRELA, our messaging of a different option to address their IBS-C symptoms resonates, and they are likely to ask their physician for IBSRELA.

Taking that one step further, we also know that when a patient requests IBSRELA, the majority of the time, the health care provider is willing to write the prescription. This year, we are increasing our opportunities to engage directly with patients. Our plans are to educate, empower and mobilize patients to take control of their IBS-C by seeking new information and talking to their doctor about the symptoms and the treatment options that are available.

We continue to drive significant volume at a rapid pace by activating patients, deepening and broadening, writing among target health care prescribers and continually improving our prescription pull-through.

We have the opportunity to further strengthen the value of IBSRELA franchise with the addition of the investigational CIC indication. This label expansion, if approved, is expected to have a meaningful impact on our business and further strengthen HCP and patient confidence in IBSRELA. Not only can it unlock the opportunity to help patients with CIC, but it would also allow us to further grow adoption among patients with IBS-C.

These 2 conditions are closely associated and the addition of CIC would allow HCPs to consider IBSRELA more closely aligned with how they typically manage patients.

These efforts, along with the lack of novel competition currently in development, present a desirable market and an opportunity that can afford IBSRELA the ability to grow volume until we are faced with a generic entrant. I'm excited about the opportunities in front of us.

We are united with a common purpose to help those impacted by IBS-C, and we are committed to act with urgency to reach our true potential. Moving on to XPHOZAH. In 2025, we had consistent growth quarter-over-quarter through the year. I'm proud of our team's ability to navigate the market while also improving patient access to its highest point since launch and increasing total dispenses by 9% and paid dispenses by 41% when excluding Medicare compared to 2024.

We are pleased with the performance in 2025 and confident in achieving the growth we expect in 2026. XPHOZAH will continue to be a contributor for Ardelyx, and our primary focus remains on supporting and ensuring access for all patients regardless of insurance coverage.

We will continue to drive clinical conviction among health care providers for earlier utilization while also growing the prescriber base and expanding depth of prescribing.

With the majority of patients treated with binders not having fully controlled phosphorus, the high unmet need remains. We have an agile, high-performing patient-focused team who is committed to unlocking the full potential of XPHOZAH and bringing this important medicine to patients in need.

We are focused on broadening reach by continuing to expand access, employing targeted sales initiatives and a cross-channel strategy to increase patient engagement. I have a tremendous amount of confidence in our ability to deliver on our priorities for this year.

Everyone in the organization is executing at a high level and delivering our shared goals from our commercial team to our clinical development, medical, manufacturing and corporate teams.

We are investing across the commercial organization to strengthen our position in the market, support patients along their journey and accelerate our growth momentum in the years ahead.

I will now turn it over to Laura. Laura?

Thank you, Eric. I'm really pleased to join you today. In addition to all the great work Eric shared with you in support of IBSRELA and XPHOZAH, I'm excited to talk about the progress we've made to advance our pipeline of new medicines to help patients. While we've been conducting studies with tenapanor in pediatric patients with IBS-C as part of our post-approval commitments for IBSRELA since late 2022, our research and development teams have also been advancing 2 new programs, which signal an important inflection point for our company as part of our corporate growth strategy.

As you know, IBSRELA and XPHOZAH were discovered and developed by scientists at Ardelyx. Their initial discovery efforts were aimed at treatments for IBS-C and began with evaluating potent, minimally systemically absorbed selective NHE3 inhibitors that block sodium absorption in the gastrointestinal tract. Inhibition of NHE3 produced an increase in intestinal luminal water content and improved intestinal transit time.

These efforts culminated in the discovery of tenapanor, which was also shown to maintain intestinal barrier function and decrease visceral hypersensitivity in animal studies. The clinical effect of this NHE3 inhibition was improvement in constipation and abdominal pain as demonstrated in our clinical trial in patients with IBS-C, and that led to the approval of IBSRELA.

Notably, it was also through these early studies with tenapanor that we uncovered the primary pathway for phosphorus absorption, the paracellular pathway and tenapanor's ability to block phosphorus absorption via that pathway eventually led to the approval of XPHOZAH. And our recent pipeline programs resulted from our knowledge and expertise around NHE3 inhibition with tenapanor. First, let's start with the planned CIC label expansion.

As Eric mentioned, the addition of a CIC indication would better align IBSRELA with the standard treatment patterns that physicians use when diagnosing and treating patients with CIC and IBS-C, which represent a continuum of functional glut disorders, whereby patients present with overlapping symptoms of constipation and abdominal pain with the primary issue of having infrequent and difficult bowel movement.

The main distinction between the 2 conditions is that in addition to constipation, IBS-C is also characterized by abdominal pain, often accompanied by other abdominal symptoms like bloating, cramping and discomfort. However, the reality for many patients is that they often alternate between the 2 conditions and therefore, might be diagnosed with either one over time.

The need for treatments with different mechanisms of action has proven essential for the management of IBS-C, and we believe this holds true for CIC as well. We are confident in tenapanor's ability to manage patients with CIC, and we have designed a robust clinical trial to support this hypothesis.

Why are we confident? First, in our clinical development program for IBS-C, the T3MPO study, we demonstrated tenapanor's ability to safely and effectively treat adults with IBS-C, which is typically considered the more challenging condition.

Secondly, in a post-hoc analysis of the T3MPO data, looking at just the constipation component, tenapanor showed a significantly better durable, complete spontaneous bowel movement or CSBM responder rate compared to placebo. And finally, we've had very productive discussions with the FDA and are encouraged that the strong safety package from our IVF clinical studies when combined with the safety and efficacy results we expect to establish from a single Phase III clinical trial will be sufficient to support a supplemental new drug application or sNDA.

Last month, we enrolled, randomized and dosed our first patient in ACCEL, the Phase III clinical trial that evaluates the safety and efficacy of tenapanor in adults with CIC.

ACCEL is a randomized, double-blind, placebo-controlled clinical trial with a planned enrollment of approximately 700 patients across 110 sites in the U.S., of which more than half are already up and running.

Patients will be randomized into 1 of 4 treatment groups, which include 3 different tenapanor doses and the placebo group with each active dose group randomized in a 3:1 manner versus placebo.

The study is comprised of a 2-week screening period, a 26-week randomized treatment period and a 4-week follow-up safety period. Our primary endpoint is measured at week 12 and will be the proportion of patients who achieved a durable CSBM response defined as an increase from baseline of at least 1 in average weekly CSBM frequency and at least 3 CSBMs, both occurring during the same week.

Additional information about ACCEL, including key secondary endpoints and evaluation of safety can be found on clinicaltrials.gov. We have a thoughtful comprehensive recruitment plan and expect to have the study fully enrolled by the end of this year.

That time line allows us to complete data analysis and report top line results in the second half of next year with subsequent sNDA filing shortly thereafter. This is a well-designed clinical trial with a strategic regulatory path that will hopefully allow us to ultimately bring this therapeutic option to patients.

Now moving on to our next-generation NHE3 inhibitor, 531. As leaders in entrepreneurs in this space, we are excited about NHE3 inhibition. And I'd like to first provide some scientific background. Sodium/hydrogen exchangers or NHE, are transport proteins called antiporters that reside on the membrane of cells and there are 9 distinct isoforms or subgroups. Their fundamental role is to maintain normal sodium, water and pH balance in our cells. NHE3 is an antiporter that is found in the gut, primarily the small and large intestine as well as the kidney.

It transports sodium into the cell and hydrogen out of the cell, thereby regulating sodium absorption, maintaining body salt and fluid balance and blood pressure homeostasis. In preclinical studies, 531 was approximately 10x more potent and 30x more soluble than tenapanor.

Those improvements alone not only support the potential for once-daily dosing, but may also provide more opportunities across different therapeutic areas. So where does that take us? Right now, we are focused on finalizing our preclinical studies to support an IND submission in the second half of this year with plans for a Phase I first-in-human safety trial to begin shortly thereafter.

Additionally, we will continue to conduct preclinical research to further inform strategies for our clinical development programs, and we will continue to follow where the science and data lead. I am very excited about the potential for tenapanor as a treatment option for adult patients with CIC and the opportunities that 531 may offer across several therapeutic areas.

These clinical development activities not only bolster the growth of our company, but equally and perhaps more importantly, they continue to expand our efforts to make a positive impact in the lives of patients, families and caregivers and the health care providers who help manage their care. I look forward to sharing additional updates in the months ahead. With that, I will now pass it to Sue.

Thank you, Laura. Four months ago, I joined Ardelyx as it was clear to me that I had a unique and incredible opportunity to become part of building a great company, helping patients and creating real value for shareholders.

On one of my first days with Ardelyx, I heard Dr. Laura deliver a powerful message that resonated deeply with me, the patients are waiting. To me, that phrase reflects urgency, purpose and accountability. When we deliver with excellence for patients, shareholder value creation follows. Since October, my conviction has only gotten stronger that we are at a turning point for our company's future. We are turning our commercial momentum into a multibillion-dollar opportunity, a once sparse pipeline into a robust development portfolio and a strong organization into an extraordinary one by elevating our game and building the capabilities required to compete and win.

Furthermore, we're turning a disciplined capital allocation into a clear strategic advantage and investing with purpose. This is more than progress. We are turning a critical corner as we drive towards profitability and meaningful cash flow generation, allowing us to strengthen our balance sheet, fund our ambitions and build long-term shareholder value.

Now let me walk you through the financials. For 2025 results, I'll be focusing my commentary on the full year performance. However, you can see the fourth quarter results on the slide and in the press release we issued earlier this afternoon.

We had significant year-over-year total revenue growth of 22% with full year 2025 revenues of $407.3 million compared to $333.6 million in 2024.

That growth was driven by a significant increase in IBSRELA demand, which grew revenues to $274.2 million, an increase of 73% compared to the full year of 2024 and finishing 2025 at the upper end of our most recent guidance range. As Eric outlined, that growth was driven by increases in total prescription volume. We also reported $103.6 million of XPHOZAH revenue in 2025, compared to $160.9 million in 2024, a decrease of 36%.

As you know, as of January 1, 2025, we no longer receive Part D reimbursement for Medicare patients, who represent roughly 60% of the total XPHOZAH patient base. However, our focus on protecting patient access, driving clinical conviction and supporting prescription pull-through drove year-over-year growth in total expenses by 9%, and we grew paid expenses by 41% when excluding Medicare.

We are tremendously proud of the efforts made this year to advance our objective that every patient prescribed XPHOZAH, received XPHOZAH regardless of their coverage.

Now turning to expenses. Research and development expenses for 2025 were $71.5 million, compared to $52.3 million in the prior year.

This increase reflects development activities for our ongoing pediatric trials as well as the ACCEL trial for CIC, preclinical research activities for the 531 program and increased medical engagement with the scientific community. Selling, general and administrative expenses were $337.2 million for the full year 2025, compared to $258.7 million in 2024.

The increase was primarily related to continued investments to drive demand and adoption of IBSRELA. Our net loss for the full year 2025 was $61.6 million or $0.26 per share compared to a net loss of $39.1 million or $0.17 per share for the full year of 2024.

The net loss for 2025 includes $49 million for noncash expenses from share-based compensation compared to $37.4 million in 2024. We finished 2025 in a strong cash position with $264.7 million in total cash, cash equivalents and short-term investments, an increase from $250.1 million at the end of 2024.

We now have had 2 consecutive quarters that we generated positive cash flow due to growing revenue. Now turning to guidance for 2026. First, looking at our revenue projections for IBSRELA, we continue to anticipate 2026 revenues for IBSRELA to be between $410 million and $430 million. That represents at least 50% year-over-year growth at the low end of the guidance range. Similar to 2025, we expect growth to be driven by quarter-over-quarter increases in demand, along with improved prescription pull-through.

As for the phasing of revenue, we expect the overall market dynamics in 2026 to be similar to those we saw last year. As we've shared in the past, the IBS-C market historically contracts in the first quarter due to co-pay resets, insurance changes and prior authorization renewals, among other factors.

We expect those factors to similarly impact Q1 of 2026 in addition to the recent winter storm burn that affected a large portion of the country. As in prior years, we expect the market to rebound in the second quarter.

Using 2025 as a proxy, we recorded approximately 16% of the full year IBSRELA revenues in the first quarter, and we anticipate that 2026 will likely follow a similar pattern. 2026 growth will be supported by thoughtful investments that will also fuel continued growth to $1 billion in 2029, representing a CAGR of 38%. We expect growth to be driven thereafter by continued adoption of IBSRELA among IBS-C patients as well as growth from patients with CIC assuming approval and market launch of tenapanor for CIC.

And to build on Mike's comments earlier regarding the new formulation patent, we recognize that there's an opportunity to see IBSRELA growth continue even beyond 2033 when our composition of matter patent expires.

IBSRELA will have the same winnable position, and we anticipate volume growth to continue until we face generic competition. Now turning to XPHOZAH. We expect revenues to be between $110 million and $120 million in 2026. We're focusing on driving depth and breadth of XPHOZAH prescribing and investing at an appropriate level to ensure that XPHOZAH remains a financial contributor for Ardelyx.

We expect that XPHOZAH will experience similar market dynamics in the first quarter as IBSRELA. We are reaffirming our expectations of $750 million before the expiration of the XPHOZAH method of use patent in 2034. And as is the case with IBSRELA, XPHOZAH growth is expected to continue until we face generic competition.

Just a note on our gross to net deduction rate. We expect our future GTNs for IBSRELA and XPHOZAH to be similar to the results we saw in 2025, which were in line with our expectations. Two of our key priorities for 2026 are to deliver commercial growth and to advance our pipeline, which requires high-impact investments in R&D and SG&A.

With that said, we expect overall 2026 operating expenses, inclusive of R&D and SG&A to increase by approximately 25% for a total OpEx of up to $520 million. We are continuing to fuel the pipeline, and with that comes increased investments in R&D, reflecting both the ACCEL Phase III trial for tenapanor and planning for a Phase I trial for 531, along with other expenses to support our engagement with the scientific community.

We also expect SG&A to grow to support a disciplined investment approach to drive IBSRELA growth through commercial execution, improved prescription pull-through and patient engagement. These high ROI investments reflect areas of growth in 2026 and will generate momentum to deliver on our longer-term IBSRELA guidance expectations as well as our planned pipeline expansion.

Our strong cash position of $265 million, supported by the significant revenue growth we expect is sufficient to cover all of our planned operating expenses and allow us to reach consistent positive cash flow with our current operations. We remain focused on thoughtful capital allocation throughout this year as we prioritize growing the top line and further advancing our pipeline.

Before I turn the call back to Mike, I want to say how proud I am to be here representing Ardelyx for my first earnings call as our CFO. I am both excited and optimistic about the future and the tremendous value we will create as a team for patients and for you, our shareholders. With that, I'll hand it back to Mike.

Thank you, Sue, and I'm thrilled to welcome you to these calls. Your perspective further strengthens our confidence as we communicate the clear growth trajectory that we're on. As you heard from Eric, Laura and Sue, our priorities are focused and execution-driven, significantly grow IBSRELA, maintain XPHOZAH momentum, further advance our pipeline and continue delivering strong financial results. We are moving with urgency and discipline against these priorities, and we look forward to demonstrating continued progress as the year unfolds.

With that, we'll open the call to questions. Operator?

[Operator Instructions]

And our first question will come from Dennis with Jefferies Company.

This is Anthea on for Dennis. Could you talk about your level of confidence on the underlying volume growth for IBSRELA to get to your $410 million to $430 million IBSRELA guidance? What's really driving that outside of big TAM? And how much of that guidance assumes improvements on the pull-through and the shift to specialty pharmacies?

Yes. First, I mean let me address that from a top line, we wouldn't give you the guidance. We have great confidence in reaching that number. As we've talked over the years, Anthea and with Dennis, is if you look at the size of this market, and the number of patients that are needing a new alternative versus what they have with secretagogue, there's a vast patient population out there to access this. So our confidence is significant and hasn't wavered, honestly. Eric, if you can go some of that, too.

Yes. Thanks very much for the question. As Mike said, we've got tremendous confidence in the guidance that we've given for 2026. In order to drive volume, we're continuing to optimize our sales force. Last year, the team did an excellent job in execution was able to drive the 73% growth. And we'll continue to optimize that so they can drive top of the funnel.

As Mike said, 77% of the patients out there on secretagogue are currently continuing to experience symptoms. So we know that the market is there. As it relates to pull-through, we are going to double our field reimbursement manager team.

We know that they provided significant value to us last year and relates to increase in approvals and resubmission rates. So we know that we can continue to improve there, and we've got a team that's going to expand and refocus there.

With regards to the IBSRELA Pharmacy network, we're really excited about this opportunity. It's actually something that we started to work on towards the end of last year. And we know that these patients, they need high touch and a more patient-centric option to go to a retail pharmacy. So what we put in place is the opportunity for them to get the care that they need to work closely with them and the physicians to make sure that we get a higher rate of fulfillment. So when you think about all those 3 things together, we feel really good about 2026 and what we're going to be able to deliver.

And our next question will come from Allison with Piper Sandler.

First, just for Sue. Following up on some of the prepared remarks on expenses, just could you provide any more color on the cadence of the RV and SG&A step-ups for '26? And just with those increases, how should we be thinking about the path forward or the path toward sustained cash flow positivity?

And then just on the $410 million to $430 million guidance for this year and going to $1 billion for IBSRELA in '29. Do you feel your existing commercial infrastructure is sufficient for hitting that longer-term guidance? Or just how should we be thinking about incremental investments on that front?

Yes. Thank you, Allison. I'll start out with your questions around OpEx. So yes, we are going to be increasing our OpEx about 25% year-over-year based on the guidance, where our top line is going to grow more than 38%. So good news is we are growing the OpEx, but not necessarily as much as we are growing the top line momentum.

In terms of what we're doing, these investments that we're making, this is really all about growth, growth not only in the commercial business, but also within the R&D pipeline that Laura talked all about. A lot of the sales and marketing that we're going to be investing in, these are not relatively new programs.

These are things that are proven, high ROI programs that are really going to drive that growth. We are going to be and continue to be significantly disciplined and in all that we do. And the other thing I would like to note, too, is as the year has already started, we have already begun these investments.

So the clip that we're on is a pretty good clip to get to do that. In terms of cash flow positivity, we have been cash flow positive. We're very proud of that the last 2 quarters, and we'll continue to do what we can to drive that. We're not really guiding to positivity at the moment, but stay tuned.

I guess the other thing I would note is, and I'll have Eric comment on it. As you've seen throughout -- when we started the IBSRELA program 3 years ago, we started with 30 people. We expanded to 60. We expanded to 124. We now see the benefits of the fans and the field-based folks out there.

So understand that we always look at how to optimize and invest, and that's something we will continue to do as this program continues to expand. And certainly, you can imagine the future with CIC that there's other opportunities to continue to expand in this organization. Eric?

Yes. I would say in terms of really maximizing the return from the investment, we're recognizing that we do have an opportunity to improve on reach and frequency. So you may have seen we posted some positions online for the ABD role, where we're going to be going up around 15 to 20 roles.

As I mentioned, we will be doubling the size of the field reimbursement team. And I feel pretty confident over that over the next couple of years. We are starting those investments now so we can maximize the return that we're going to be able to get in 2026, as well as into 2027.

And so I don't anticipate too much changing there. But of course, we are always looking at -- always looking at the market and our performance and see ways that we can be better for patients.

The other thing that I would just call out from a marketing standpoint, the team has really done a nice job of digital marketing and making sure that we're engaging with physicians, reaching that population that's out there.

And so this year, you will see a concerted effort and focus on the patient. As Mike mentioned, you know that it's a sizable patient population out there, and we have an opportunity to reach out, engage with them. We know when they are aware of IBSRELA, they go into the office and the physician will write that prescription.

So we want to make sure that we're pulling through not just on the sales side, but also on the marketing side, the team has already started that. And the investments that we're making in Q1, you'll see those will be fairly consistent throughout this year.

We'll move next to Chris with Raymond James.

This is Sam on for Chris. Just one on the CIC trial. Can you talk more about the 2 lower doses you're testing? If I recall correctly, these dose levels weren't quite as efficacious in IBS-C.

So what are your expectations for how these dose levels will perform in this trial? And is having multiple dose options part of your strategy in CIC? Or are you trying to find just one optimal dose?

Yes. I think at the end of the day, we want to obviously make sure that as we evaluate safety and efficacy that we are able to actually look at a dose that we don't expect to provide as much, right?

You typically want to look at the least effective dose. And so that is the lowest dose. We don't expect a lot from that. But I think as I said earlier, CIC seems to be the less difficult condition to treat. And so it makes sense for that middle dose of 25 milligrams BID.

And then the 50-milligram dose is obviously the dose that we use and the data that we use in our T3MPO trials to actually provide us some probability of success for this trial. So it's a nice way to look at dose response in a single Phase III well-designed, robust study.

And I'll just highlight that, too, is we're going to follow the data, right? And what these 3 different doses tell us will tell us what we move forward with.

And next, we'll hear from Matthew with H.C. Wainwright.

Great to see the successful quarter. So with IBSRELA offering its differentiated NHE3 inhibitor profile, what do you see being the greatest distinctions in the future for the CIC market when we think about the other GCC agonists or serotonin receptor agonist mechanisms, for instance? Really just any color on the unmet need and the differentiation there?

Thanks for the question. It's a great question. I think at the end of the day, what we talked about before was the fluidity, right, between these 2 conditions, IBS-C and CIC. And so just as we've seen with IBS-C, the need for a different mechanism of action, right, because a number of patients on other drugs are still symptomatic. And so that is important also with CIC. And I think that really speaks to the potential utility of tenapanor in that patient population.

And you look at the evolution of how CIC, functional compensation, IBS-C are characterized by the Rome Foundation, it is continuing to evolve over time. And notably, the CIC population is certainly larger, but many of those patients early on are well-treated by over-the-counter medications.

And if you look at the prescriptions that we talk about where there isn't a differentiation in IQ or other data in terms of what is for IBS-C or CIC, you're seeing a mix between the 2. So that's why the continuum that Eric mentioned of how we can speak to IBSRELA and NHE3 inhibition as a different choice versus all the secretagogues, which is basically it.

And the serotonin is a motility drug, completely different mechanism and impact on the patient. So this seems for us, and I think as we hear from the work that we're doing, that it is right for this to be going into CIC because there is such a continuum between CIC and IBS-C.

Next, we'll hear from Roanna with Leerink.

So I was curious for CIC, what will prescribers focus on most in terms of the primary and secondary endpoints in the Phase III study? And is there an efficacy bar that you're thinking about for defining a highly successful trial in CIC?

One comment then I'll probably go too far with it, I'll ask Eric to comment [indiscernible] in the field. What's interesting is when you talk to gastroenterologists about this, they know how to make people have bowel movement, right? They know that they can do that.

And if they're going to have a hard time succeeding with the different over-the-counter and other things that they do, they move to pharmacological intervention. And so those patients that are not getting relief this primary endpoint of CSBNs are ultimately in a durable response that Laura described in the endpoint, that's what you want to see in a patient that's having these challenges with bowel movements.

And that's what you look for. Secondary endpoints, quality of life benefit. But at the end of the day, someone with chronic idiopathic constipation, you want them to be able to have bowel movement.

Yes. I would just add, these patients are chronically constipated, as Mike said, and it has a significant impact on their life. So first and foremost, from a primary endpoint, we want to make sure that it can work in constipation and have a lot of confidence there.

From a secondary endpoint, as Mike mentioned, quality of life, patient-reported outcomes, those are areas that we're going to focus on to be able to show that we can treat not just the CIC, but the patient as a whole and feel really good about being able to do that.

And lastly, as Laura mentioned, with a differentiated mechanism of action, these are multifactorial conditions and patients need options. And so we want to be that option for them just like we are with IBS-C. We've got a good position there and feel like we will be able to create a similar market and opportunity for CIC.

And next, we'll hear from Yigal with Citigroup.

This is Jin Kim on for Yigal. Congrats on the progress. Maybe just a quick one from us. Any additional color you can provide on additional patents or other layers of protection you could -- you're thinking about building up in the future?

Yes. I mean I think as I said in my opening comments, our job in this business is to continue to strengthen our intellectual property position for products like XPHOZAH/IBSRELA and that's what we're continuing to do.

I think this patent on the formulation is really important, the fact that it's listed in the Orange book exactly what you would want to see. And needless to say, I think without any specifics of what we're going to file or have filed, there are other things that we are working on to further strengthen that position.

And maybe just one more, if I could. How are you thinking about long-term XPHOZAH growth post 2026, given potential adjustments in Medicare base rates for phosphate binders? Any additional color you can provide on that?

I remind you, Medicare base rate and phosphate binders, we do not benefit from that. We made the decision, as I noted in my opening comments that 18 months ago, we made a determination not to participate in that.

So our business is focused on in terms of the revenue-generating business, Medicaid and Medicare -- Medicaid and commercial, excuse me. And the Medicare segment is what Sue referenced to as well is to make sure that any patient that is appropriate and needs XPHOZAH for our label has access to it.

And that's what we're extremely proud of, where you saw both the non-Medicare segment, 41% growth during that first year of the tenapanor period and an overall growth of dispenses of 9% in the face of all that's going on. So we're extraordinarily proud of that and certainly a longer answer than I think your question, but the base rate increase is not relevant to this business.

Our next question comes from Laura with Wedbush Securities.

This is Thomas on for Laura Chico. So perhaps one question for IBSRELA. So historically, you've positioned IBSRELA for later lines of treatment for IBS-C. But as you're now projecting over $400 million in revenue for this year, just wonder if there might be more leverage to reengage with payers and reexploring how frontline use can fit into the picture.

And to that end, I wonder if frontline utilization, how much if at all factors into your 2029 peak revenue target?

Sure. No, thanks for the question, Tom. And it's interesting. We've talked about this before is it's 50,000 new patients coming on to IBS-C indicated therapies a month. There is over 7 million prescriptions written last year for IBS-C therapies.

We need a small fraction of that in order to get to our aspirational numbers. So we're extremely confident in the market opportunity there that's for our indication without having to go to frontline.

Notably, however, our clinical work, our package insert is a first-line therapeutic. The payer dynamics, which continue to be the fuddling to me in this industry and the challenges to get good medicines to patients are the challenge that we all face.

I think the work that Eric and our market access team and the leadership that we have there is having us be very thoughtful about how we ensure appropriate market access and lessening as many hurdles as possible. Going after frontline is not an objective that we have and is not factored into the numbers.

Although as we've noted in other calls, there is some organic growth in first-line use because I think people have conviction the benefits this product is providing their patients. You want to add, Eric?

Yes. I would say last year, one of our priorities on the commercial side was building out our payer and market access team. We've done a nice job of bringing in the right team. These individuals are engaged with payers, and they continue to put hurdles in place, and we are working with them to make sure that patients can have access to our products.

So we don't aspire to have first-line therapy at this point in time. You mentioned kind of later line utilization. And I would say when we look at our internal market research, it's typically around second in third line.

So our goal is to be the first branded product post the brand or generic utilization. And so that's the team what they're messaging out there. And based on the tremendous amount of success that we saw last year in 2025, we continue to feel that that's the right position.

But yes, we continue to work with all of the stakeholders that are out there to make sure that patients have access to our products. And again, we'll continue to invest in those areas and feel good about the direction we're at.

And we'll move next to Julien with BTIG.

Congrats on the progress. First, can you talk about how the recently issued 299 patent contributes to your overall IP strategy for tenapanor? Wondering if the patent covers unexpected effects or any other features that you believe help strengthen the patent.

And then I thought I heard in prepared remarks that CIC labeling could potentially bolster your ongoing efforts in IBS-C. Just wondering if you could expand on that some more, what dynamics would you expect to be at play there?

Sure. Just a brief comment on the intellectual property. This is a formulation patent, very clear and straightforward. It's now Orange Book listed. It goes back to 2042. And that's the important thing to focus on is building that sort of [ bulwark ] of support as we continue to build this business. So feel good about it and ultimately, other IP that we will pursue. But this is a strong formulation patent for the commercial formulation of the 2 products.

Yes. And I'll take the second part of that question as it relates to CIC and IBS-C. So as Laura mentioned, I mean, these 2 conditions are closely related, and we know that physicians use the screening docs in both indications. And so as we gain experience and if approved, an indication in CIC, we know that it will improve physician confidence across both CIC and IBS-C because we feel like we can be the product of choice for those physicians.

So when we did our research, not only did we see improvement in the CIC, but we also saw increased confidence in the IBS-C side, and that's what continues to feed into our optimism as we think about really the true value that IBSRELA can provide for those patients out there with CIC and IBS-C.

And we'll move to our next question from Aydin with Ladenburg.

Congrats on a great quarter. I've got a couple. So first, IBSRELA question. So you guide now 2029 $1 billion plus. So you consistently got $1 billion, but we previously assumed I think that would occur in 2033.

So do you have any comments, any forecast, any sort of guidance as it comes to 2033, how -- what should we expect for that year? And when do you think that PPA actually may happen for IBSRELA?

And the second question I'll ask is about the CIC trial. So those -- as you mentioned, those are -- those have always been interrelated indications. And so you decided to start the trial. Just curious to understand how the things changed over the past several years.

So was it previously you didn't start the trial because of financial constraints? Or what are other potential reasons that sort of simulated.

Sure. I mean I'll answer the second part first, but then actually ask Laura to address it as well. [ I'm cheap ] and wanted to make sure that we had enough capital to do the work we need to do.

Honestly, that's the very simple calculus that got us to where we are today. The fact that we ended last year with more cash than we did the year before gave me the confidence that we can do this and invest appropriately into the pipeline.

And then for your first question, the fact that we gave you the numbers, $1 billion in '29, I would argue that our internal projections might have been close to that, and we were not yet -- we decided to not yet provide that.

We will continue to grow thereafter. LINZESS continues to grow, has not peaked. So this business, this patient population where there's a huge, huge need continue to come to therapy and more innovation that comes, the more patients that are going to evolve.

So what peak ultimately looks like, we're all going to get there together and starting where we are now with the kind of growth of 73% over '24 and a 38% CAGR to get to $1 billion, the math is pretty straightforward.

So I would urge you to take a look at that and the kind of growth that you see in the IBS-C marketplace where we see the kind of growth with only one mechanism of GCC agonist before us, should give you some perspective as to what the market through LOE would look like before [indiscernible]

And we'll move next to Peyton with TD Cowen.

This is Peyton on for Joe. I guess just a quick one for me. Could you talk about how the CIC trial is powered? And then what proportion of patients need to be CDSM responders and that you're targeting?

Yes. So the powering, it's a pretty robust sort of sample size calculation. We powered it at 95%. So we feel really comfortable there. And when you couple that with the data that we saw in our T3MPO studies, it gives us a lot of confidence in terms of the probability of both technical and regulatory success. So as I said before, the sample size is about 700 patients, and obviously, that reflects the 4 sort of treatment arms, right, 3 active doses and placebo. And again, that's about 173 patients per arm.

And the proportion of patients that need to be CDC responders per arm?

Yes. Our initial -- when we looked at the data in terms of our T3MPO studies, we saw about at least a 20% difference between placebo and tenapanor. And so our sample size calculations are such that we're looking really about around the same sort of difference, 18% to 20% difference between placebo and active drug. And that is for the 2 that for the 25-milligram and 50-milligram dose.

And our next question comes from Jennifer with Cantor Fitzgerald.

This is Jennifer on behalf of Prakhar Agrawal from Cantor. I wanted to ask about IBSRELA. Can you talk about the IBS-C market where you're finding the greatest opportunity?

And what is driving the market growth of double digit? And how long do you think this is sustainable? And on XPHOZAH, you shared that the peak opportunity being at $750 million. Can you talk about how you get to that number based on the current trends?

Sure. IBSRELA market, I'm sorry, if you could repeat the question. I didn't hear you clearly.

So with the IBSRELA drug on IBS-C, I wanted to understand where is the greatest opportunity? And what is driving the market growth of double digit? And how sustainable do you think it's going to be?

I think in the previous question that I answered with 50,000 patients coming in every month from the GCC agonist already, there is a -- and 7 million patients already on therapy. There's a very small percentage of that, that ultimately we need to get to $1 billion. So confidence in there is high, particularly given our clinical differentiation.

And with the XPHOZAH very much the same kind of dynamic, right? I mean if you look at the Medicare population that we lost, the original numbers I've gone to before is 550,000 patients on dialysis 60% of those are Medicare. You lose those 330 -- 220,000 patients that are Medicaid and Medicare. Those are revenue-generating patients for us. It's less than 100,000 patients closer to 50,000 that you require in order to get to the guidance that we gave.

And this concludes our question-and-answer session. I'd like to turn the conference back to our host for any additional or closing remarks.

Thank you, operator. To our investors, our employees and really especially our patients, thank you for your continued engagement and support. We're encouraged by the progress we've made and excited about the opportunities ahead. We remain focused on discipline execution and long-term value creation and we appreciate your continued confidence as we move forward.

With that, we can now end the call . Thank you operator.

And this does conclude today's conference call. Thank you for attending.

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" Raymond James

" Citi

" Leerink Partners

" Jefferiesruiz

" Wedbush Securities

" H.C. Wainwright

" TD Cowen

" BTIG

" Ladenburg Thalmann

" Cantor Fitzgerald

Good day, everyone, and welcome to the Ardelyx Third Quarter 2025 Earnings Conference Call. Now I'd like to turn the call over to Caitlin Lowie, Vice President of Corporate Communications and Investor Relations. Caitlin, please go ahead.

Thank you. Good afternoon, and welcome to our third quarter 2025 financial results call. During this call, we will refer to the press release issued earlier today, which is available on the Investors section of the company's website at ardelyx.com.

During this call, we will be making forward-looking statements that are subject to risks and uncertainties. Our actual results may differ significantly from those described. We encourage you to review the risk factors in our most recent quarterly report on Form 10-Q that will be filed today and can be found on our website at ardelyx.com. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so even if our views change.

Our President and CEO, Mike Rabb, will begin today's call with opening remarks and an overview of the company's progress during the third quarter of 2025. Next, Chief Commercial Officer, Eric Foster, will provide an update on the performance of IBSRELA and XPHOZAH. Justin Renz, Chief Financial and Operations Officer, will conclude today's prepared remarks with a review of the company's financial performance during the third quarter ended September 30, 2025, before we open the call to questions.

With that, let me pass the call over to Mike.

Thanks, Caitlin. It's great to be here with all of you today to share our third quarter 2025 results. Another standout quarter for both IBSRELA and XPHOZAH. This performance demonstrates the power of our commercial model, the momentum behind our products, the exceptional execution by our team and the real-world impact that our differentiated therapies are having for both patients with IBS-C and for those with CKD on dialysis.

We generated $105.5 million in product revenue during the third quarter, representing 15% year-over-year growth, a signal of strong demand across our portfolio. In January, I outlined 4 key priorities for Ardelyx this year: one, to accelerate IBSRELA's momentum; two, to execute on our XPHOZAH strategy; three, to build the pipeline; and four, to continue delivering strong financial performance. 10 months later, it is clear that the team at Ardelyx is delivering on these key priorities, and as a result, we're building real sustainable momentum.

I'd like to provide a bit more detail on each of these areas. IBSRELA continues to outperform and is the foundation of our portfolio and the main engine for Ardelyx' future growth. IBSRELA set yet another record, generating $78.2 million during the third quarter, a 92% increase over last year. Demand growth is broad-based and demonstrates how vital this therapy is for patients. The IBSRELA team is doing an exceptional job expanding reach and deepening prescriber engagement and conviction.

Every driver that has fueled our success remains strong, a passionate patient community, an engaged prescriber base and a novel commercial strategy. We expect this momentum to continue through Q4 and beyond. As a result, we are raising our guidance, and we expect to generate between $270 million and $275 million in IBSRELA revenue this year.

XPHOZAH also had an incredibly strong quarter, generating $27.4 million in revenue, a 9% increase compared to Q2. The XPHOZAH team is navigating this dynamic market with determination and agility as we execute on our strategy, ensuring patient access, strengthening clinical conviction among nephrologists and driving prescription pull-through. XPHOZAH is a valuable component of our growth, and we expect its contribution to our business will only grow over time.

Today's announcement of ARDX-10531, which we will refer to as 531 is the next-generation NHE3 inhibitor and marks an important milestone for Ardelyx as we reinvigorate our pipeline. We at Ardelyx pioneered NHE3 inhibition and with tenapanor, we have the only approved modulator of this pathway on the market. With 531, we may be able to unlock even greater benefit for patients.

Early preclinical data demonstrates that 531 is a highly potent, highly soluble molecule that could open development opportunities across a broad range of therapeutic areas. Preclinical and manufacturing activities are underway in advance of a Phase 1 study. This investment in 531 reflects thoughtful stewardship of an important internal asset and is our first new development program in more than 3 years. We are committed to building a broad, sustainable pipeline, capitalizing first on an internal asset, while in parallel, we explore external opportunities.

As we build this pipeline, we are taking a disciplined and forward-thinking approach, identifying opportunities where Ardelyx can win. We are going to leverage our expertise, assets and scientific clinical and commercial leadership to unlock value. 531 is a reflection of that approach, and I look forward to sharing more information on our plans for this molecule as we advance through the development program.

Finally, I want to highlight our financial strength. With the meaningful revenues we expect to generate in 2026 and beyond, we're extremely well positioned to thoughtfully invest our capital in current commercial endeavors and to grow our pipeline. We are delivering on our 4 key priorities. We are driving meaningful impact for patients, and we are creating lasting value for shareholders.

Before I hand the call over to Eric, I'd like to formally welcome Sue Hohenleitner to Ardelyx as our Chief Financial Officer. She's a remarkable leader who brings deep financial and strategic expertise to Ardelyx, and she's already making her mark. Challenging our thinking, strengthening our plans and energizing our path forward. She's joining a highly experienced leadership team with the technical expertise, vision and enthusiasm to lead and write the next chapter for Ardelyx.

With that, I'm pleased to turn the call over to Eric, who will share his perspectives on our commercial performance. Eric?

Thanks, Mike, and it's great to be with you all once again. The commercial organization continues to operate at an exceptionally high level. Our commercial strategy is strong and continues to be the foundation of our success. We are focused on addressing areas of high unmet need, delivering first-in-class medicines, leveraging a targeted sales and marketing approach to both patients and prescribers and investing in high-impact patient services programs to improve access.

I'm excited to share with you today how this focus drove our performance during the third quarter, starting with IBSRELA. The strong demand for IBSRELA continued during Q3, leading to our highest demand quarter since launch. Additionally, we delivered record highs in the following areas. Revenue was $78.2 million, posting 92% growth year-over-year. We continue to see the strength of our field sales force and the impact of our marketing initiatives, which drove us to new highs in new writers and total writers, reflecting growth in both depth and breadth of writing.

This increase in writers also led to growth in new refill and total prescriptions. Once again, the increased and focused activity from our field access manager team resulted in improved pull-through rates. These results clearly indicate that our strategies are working and our strong momentum continues. We remain focused on the patient, the prescriber and improving prescription pull-through so more patients can benefit from IBSRELA.

First, the patient. IBS-C patients are incredibly engaged and consistently seek information and new options to address their unmet IBS-C symptoms. In fact, more than 75% of surveyed patients report that they continue to experience the symptoms of IBS-C despite treatment on a secretagogue. In contrast, patients report highly satisfied with IBSRELA.

In a poster, we presented earlier this week at the American College of Gastroenterology's Annual Scientific Meeting, 88% of surveyed IBSRELA patients reported treatment satisfaction. Further internal market research also suggests that when patients learn about IBSRELA, they are motivated to ask for the therapy by name, and when they do, physicians are highly likely to prescribe it. Our focus on the patient will continue. In some areas, we will increase our investment in targeted patient marketing efforts to support our future growth expectations.

Next is the prescribing health care provider. The investments we have made in our field-based team and physician marketing efforts continue to demonstrate that HCPs are highly responsive to IBSRELA's safety, efficacy and tolerability profile and its differentiated mechanism of action. Once again, we saw increased targeted activity from our sales team who drove expanded adoption and utilization. We maintain our focus on driving depth and breadth of prescribing among high-writing HCPs who are frequently seeing patients with IBS-C. Our messages are resonating, and the team will continue to drive clinical conviction and ultimately to identify and prescribe IBSRELA for those in need.

Finally, prescription pull-through. The investments we are making in this area are delivering improvements across the patient journey. Our field access manager team increased their call activity during Q3, translating into increased rates of prior authorization approvals and resubmission approvals. We continue to look for ways to improve the patient experience, lessen the burden on HCPs and help ensure that every patient who has prescribed IBSRELA gets on treatment. We are focused on addressing critical aspects of the patient and physician journey and maintaining and building momentum as we enter the fourth quarter.

As I mentioned earlier, my team and I just attended the ACG Annual Conference, and we heard directly from many HCPs about the impact of IBS-C and the important role that IBSRELA is playing for their patients. We are committed to the patient community, and we continue to bring important science to HCPs with 3 posters presented at the conference. I'm incredibly proud of all this team has accomplished, and I look forward to a strong close to 2025 on our path to more than $1 billion peak revenue.

Now turning to XPHOZAH. The team continues to execute and drive demand. In Q3, the team delivered $27.4 million in revenue, a solid 9% revenue growth compared to Q2. This demand-driven growth demonstrates a clear need among patients for XPHOZAH. Our strategy is anchored in access to XPHOZAH for all patients who receive a prescription regardless of payer. We are pleased that this strategy is working, and we remain confident in our long-term growth expectations.

The team remains focused on driving clinical conviction among nephrologists to prescribe XPHOZAH for appropriate patients, encouraging prescriptions to be sent to ArdelyxAssist to ensure patients get on treatment and providing important resources to support prescription pull-through. Our steady and consistent progress is evident in the growth we see across a number of key demand indicators. Total writers grew quarter-over-quarter. We grew new and rebill prescriptions, which resulted in growth in total dispenses compared to Q2, including increased volume for both paid and patient assistance prescriptions. In short, more patients have access to XPHOZAH today than ever before.

We also saw continued improvement in prescription pull-through following our investment in the field access manager team. Importantly, we saw a second consecutive quarter of growth in the non-Medicare payer segments. These are all very encouraging indicators, demonstrating that the momentum we experienced in the second quarter continues through the third quarter as a result of our strong commercial execution. We focus on expanding breadth and depth of XPHOZAH writing among healthcare providers and continue to place the nephrologists at the center of decision-making.

We also connect with other stakeholders in the community, including the dialysis providers, renal dietitians and advocacy organizations that are important to patient care. We have a broad-based team focused across the patient journey and continue to engage with all stakeholders about the importance of XPHOZAH. I will be joining the team on Tuesday at the American Society of Nephrology's Kidney Week to engage directly with HCPs and learn from them about the value that XPHOZAH provides.

We also have 3 posters being presented that will further support our efforts and will highlight the importance of XPHOZAH for patients with elevated phosphorus. Consistent progress will fuel a strong finish to 2025 for XPHOZAH and create a solid foundation for further growth next year and beyond. I am proud of this team and their efforts in this dynamic market. We remain confident in our long-term peak guidance of $750 million.

Looking at the fourth quarter and into next year across our portfolio of products, we will continue to execute our strategies at a high level and create new opportunities for growth. We have the right team and the right focus. We're making a difference for patients and driving impact across the business, and we remain steadfast in our commitment to bring these important medicines to the many patients in need.

I will now turn it over to Justin. Justin?

Thanks, Eric. Ardelyx delivered an impressive quarter with continued meaningful growth for both products and another record-setting quarter for IBSRELA. We thoughtfully invested to improve our commercial opportunities, restart our pipeline and strengthened our balance sheet through significant top line growth.

Starting with revenue. For the period ended September 30, 2025, we reported total revenue of $110.3 million, an increase of 12% compared to the $98.2 million we reported in Q3 of last year. The growth was primarily driven by an incredibly strong performance by IBSRELA, recording revenue of $78.2 million, an increase of 92% over the same period last year. The team's focus on driving increased demand for IBSRELA and improving prescription pull-through continues to drive this momentum.

The performance was also a result of expected improvement in our gross to net deduction, finishing the third quarter at approximately 31%, a slight improvement over Q2. We expect IBSRELA growth to continue, and as such, we are raising our guidance and currently expect to finish the year between $270 million and $275 million in revenue.

XPHOZAH delivered another solid quarter of growth, generating $27.4 million in revenue during the third quarter of 2025, an increase of 9% compared to the second quarter of this year. Our gross to net deduction of approximately 29% was consistent with the second quarter. Finally, you will note that we recorded $4.8 million in non-cash royalty and commercial milestone revenue during the quarter, a significant increase compared to previous quarters and last year. We are pleased to share that our partner in Japan, Kyowa Kirin Co., achieved year-to-date sales levels that triggered a $3.4 million payment, which will be passed along to Healthcare Royalty Partners later this quarter.

Now turning to expenses. Third quarter expenditures were up compared to the same period of 2024, reflecting our investment in growth and spending levels were consistent with Q2 of this year. R&D expenses were $18.1 million for the third quarter of 2025 compared to $15.3 million for the same quarter of the prior year. SG&A expenses were in line with our expectation at $83.6 million compared to $65 million we reported in the third quarter of last year and reflects our continued investments in commercial activities to drive growth.

Our net loss was approximately $1 million or less than $0.01 per share in the third quarter compared to a net loss of approximately $800,000 in the same period of last year. In addition, our third quarter 2025 results included $4.8 million in non-cash revenue, $12.7 million in non-cash stock compensation expense and $2.2 million in non-cash interest expense. We are pleased to report positive quarter-over-quarter cash flow as a result of significant growth on the top line. We finished the quarter with a very strong balance sheet, including $242.7 million of cash, cash equivalents and short-term investments.

As I prepare to step away from the CFO role at Ardelyx, I would like to thank all the investors and analysts who I've had the pleasure to interact with over these past 5-plus years. I would also like to thank all of the Ardelyx team members who had the privilege to work with, and to all, I'm delighted to welcome Sue to the team. We've had the opportunity to work together in transitioning the various tasks over these past couple of weeks, and you will find her to be a strong and capable financial leader. I look forward to following Ardelyx in the future as I begin my next journey.

With that, I'll hand it back to Mike.

Thank you, Justin, not just for the thoughtful commentary that you provided as you finish up your final quarter with us, but for your leadership, your partnership and support of everyone at Ardelyx.

Ardelyx' third quarter performance was a continuation of consistently delivering on our priorities. IBSRELA's strength is the foundation of our growth and the opportunities ahead for this business are significant. XPHOZAH remains an important contributor to our business. 531 is our reentry to product development and our strong cash position demonstrates our focus on being prudent stewards of our resources while investing in growth. I look forward to sharing more updates on our progress in the quarters ahead.

Elvis, you can now open the call to questions.

[Operator Instructions]. Our first question comes from Chris Raymond of Raymond James.

Best of luck to you, Justin. It's great working with you and hope to in the future. Just some questions. Maybe first of all, on IBSRELA. Just looking at the -- I guess, it's the SparxIT data that kind of sticks out to me the most. You guys have now sort of mid-teens share, I think, overall in the IBS-C market, but first-line share looks like it's also in the single digits.

Mike, maybe -- obviously, you got a long way to go to compete with Linzess for frontline share, but maybe just talk about how frontline use maybe is factoring into your long-range plans and what you guys are doing to try to make that more of a lever that you can pull? Then maybe the next question on the 10531, I guess you guys didn't talk about indications maybe for a reason, but just looking at the literature and potential targets for a potent soluble molecule here, some pretty big indications, hypertension, heart failure, maybe some diabetes indications. Are you looking at something as more broad or more of a targeted indication?

Well, I think let me answer the second part first. We've got to take some baby steps before we go to the sprint in marathon, right? I mean we understand how to develop NHE3 inhibitors exceedingly well. The characteristics of the molecules are extremely unique and the fact that we've got one that's as soluble and potent as this does open up the opportunity to consider things like what you just described. It is premature for us to consider what indications until we go through these initial steps.

As I said in my comments, the ability that we now have to invest in what we have created in NHE3 inhibition is an incredible strength. I'll head it off questions that I'm sure are going to come is that this is well within our ability to spend and get it to the phases of development as we take advantage of the engine that IBSRELA is. To your questions about IBSRELA, I'll ask Eric to comment as well. I think as we've spoken in the past, Chris, the indication in our clinical work was first line, right?

There is nothing in our label, nothing in our clinical work that says it cannot be first line. The growth that you see in that is completely organic. When we started this effort to commercialize IBSRELA, we made the intentional decision to position it in a way that is second and third line because no matter what we did with PBMs and formularies, we would never be first line because we wouldn't generate the kind of revenue to supplant what they're getting from current first-line therapies.

We are seeing that organic growth because it is a good drug and experience with physicians who are writing the scripts are being successful in driving those through. There are millions of patients on GCC agonist right now, 80% or more of which are dissatisfied with their therapy. The market could grow no more, and we would still be able to meet our objectives and the projections that we've had. I think it's a really important way to think about the business is we -- because of the way that we've approached this, our target and our commitment to $1 billion or more is based upon second-line therapy with the established patients that are there and the call points that Eric and the team are pursuing.

Anything to add to that, Eric?

Thanks, Chris, for the question. Yes, the only thing that I would add to that, Mike, is we're coming off a third quarter where we've got all-time highs in new writers and total writers. Clearly, we are doing a great job of expanding breadth and depth and utilization of IBSRELA. With that comes confidence in the product when they see the results and the impact that it can have with patients. As you mentioned, we know that more than 75% of the physicians or patients that are out there are continuing to experience symptoms, so they need something different. We remain committed to our strategy. We're pleased to see that it does get some utilization first line, as you noted, that we're indicated from a first-line basis, but we remain committed and very confident with what we saw in Q3 and the momentum that we're generating coming into Q4.

Next, we have Yigal from Citi.

This is Joohwan Kim on for Yigal. Congrats on the quarter. Maybe just 2 quick ones for us. I know you had commented on solubility and potency, but just wondering if you could provide a little bit more color on what 531 is hoping to solve that was suboptimal versus tenapanor?

Versus tenapanor is one way to look at it. When you have highly soluble gut-restricted drugs, you may have better penetration into the target of NHE3. Solubility matters to have a molecule do what it needs to do where you're trying to target it. Potency will bring you lower doses or better efficacy. That's exactly the preclinical work that we're embarking upon is to understand how best to leverage those qualities of this molecule. As I said in the previous question, it's premature for us to speak as to whether or not it is to answer questions that tenapanor can't or if there are other indications that make more sense to pursue.

Maybe just one more, if I may. It seems like Israel is really continuing to take off due in part to the investment into the sales force. Just wondering, as you're seeing that there's still a big opportunity there, is there any consideration for perhaps increasing the sales force even further beyond what you had already done to reach that peak 750 as early as possible?

I mean the one -- just a general comment, I'll ask Eric to comment on the specifics. Every day, we think about where else we can invest in this growth and this opportunity because what we see here in terms of the benefits providing patients, the organic growth that the previous question had in terms of moving into first line, this is a very good drug that's helping a lot of people. There are a lot of people that aren't being helped by it yet because of the breadth, depth and reach. There are many ways to communicate with those HCPs and those patients, and that broad-based approach is what we will always consider. We will always look at new and better ways to penetrate, but certainly investing those considerations and investing in whether it's the fans of the sales force is something that Eric always considers.

Yes. Thanks for that question. As Mike said, we're constantly looking at the data to see where we can continue to drive growth and value. As we're looking at the sales force, just recall, we're now about 3 to 4 full quarters in with the expanded sales force. What they've done is really raised the bar. Right now, I've got great confidence in this team. We are well on our path to achieve $1 billion peak year sales. As we go into Q4, I feel really confident about where the team is. We'll continue to look at the size of the field team, but we remain confident there.

Also just want to take the opportunity to remind you, it's not just the field team. We've got great marketing initiatives out there. We've got a wonderful field access manager team that's focused on pull-through. It's really a team effort out there that's driving the growth of IBSRELA.

Next, we have Roanna Ruiz from Leerink Partners.

A couple for me. One for thinking about IBSRELA. What pushes and pulls could impact your ability to reach the high versus low end of your new guidance? It did sound like you're making great strides with new and repeat prescribers as well. Could you give us a little bit more color like what's resonating there?

Yes. I mean I think the guidance reflects our confidence in what we are doing with all the questions you've heard previously. I think that increased guidance in the range that we've provided is to show you our confidence in what we're going to deliver this year. I think Eric can go into some more of the specifics around it, but that should speak for itself. I think, Roanna, you've noticed over the years that we've taken a pretty conservative approach in the way that we provide these numbers. What we do is give you numbers that we are confident that we're going to meet. That's been consistently the way we've approached it over the years.

Yes. Like I said earlier, I mean, we're very confident in the strategy we have. If you think a little bit about what I mentioned earlier, we know that there are millions of patients out there that are -- have been on or are on secretagogue. Again, more than 75% of those patients continue to experience symptoms of IBS-C. What they need is something different. We know that this is a multifactorial disease. They need something that potentially offers a different mechanism with a proven safety and efficacy profile.

I mentioned the poster at the American College of Gastroenterology that was just presented showing that more than 85% of the patients out there were satisfied with IBSRELA. We have a great opportunity out there to address a high unmet need in this patient population, and we continue to be confident with the strategy.

One question on 531. It did sound like it's just the beginning of building the pipeline. I was curious if there are any other targets or molecules that you're interested in or would consider? Is external BD also an option?

Well, yes, I mean, to the second part first is, as you know, just under 2 years ago, we brought in Mike Kelleher to lead our corporate development efforts. He and his team are always looking and speaking to opportunities that are out there. We will pull the trigger on things when the right thing is there for us.

As I said in my opening comments, we're now at a place where we could look at these assets that we had sitting on the shelf because they're really good. Are there other ones? There may be, but our focus at this point for our internal pipeline generated pipeline is 531.

Our next question comes from Dennis Ding of Jefferies.

Congrats on the quarter. Two questions for me. One on IBSRELA. You guys are running trials in peds less than 18 years old. Can you help frame the size of that market versus the adults and if that is already accounted for in your $1 billion peak sales guidance? Also maybe comment on the timing of clinical trials to go into CIC?

Then number two, on XPHOZAH, congrats on the progress there, but there's still quite a large gap between where XPHOZAH is now and the $750 million you guys are guiding. What are things that are within your control to really accelerate that?

Sure. Thanks for the question, Dennis. From the top, if you look at where we are with IBSRELA and where -- sorry, the pediatric trials were a commitment that you have to make to the agency. I think if you look at the total prescriptions that are out there for IBS-C, it includes those. The market that we're all penetrating is relatively small, but any IBS-C drug, those are included in the prescriptions there. We've not specified whether or not we are counting on that to get to the $1 billion because we're just looking at the total market as the market that we're penetrating.

For CIC, we've not spoken of doing anything there. It's obviously, as I spoke in your last meeting in London, that is obviously one that we would consider as we have the ability to pay for it. Those are the sorts of things we will look at. As it relates to XPHOZAH, I think as we've talked about this, it's important to note that when we ended last year, we lost 60% of the revenue that was being generated by XPHOZAH in an incredibly tumultuous market for these patients that are depending upon effective phosphorus management to survive in many cases. That turmoil is real. It's significant. We just put numbers on the board that are as good, if not better, even having lost that 60% of the revenue for the entire portfolio. The strength of this team and what we've done, I think, is what you see in the results that we're speaking of today.

We have great confidence in our ability to get to $750 million. I will leave it at that because we've spoken about the specifics numerous times of it's 1/3 of the TAM that we now have of 220,000 patients is what is required to $750 million. If the need is as extensive and significant as we believe it is and demonstrated both by the paying and the patient assistance program patients, the turmoil of the TDAPA period is turmoil. Once you get past that, likely that's going to change.

Laura Chico from Wedbush Securities has our next question.

This is Thomas on for Laura Chico. Just one from us. You discussed gross to net for 3Q earlier for XPHOZAH. Any thoughts on gross to net dynamics heading into 2026? How might this compare to 2025 levels?

Thank you, Thomas. Our gross to net was approximately 29% for Q3, and we do think that will be somewhat consistent going to Q4. We're not in a position yet to discuss specifics around 2026. Look for us to update that in early 2026.

Next, we have Matthew Caufield from H.C. Wainwright.

When we think about XPHOZAH and getting those prescriptions filled, should these essentially be primarily filled through ArdelyxAssist and the patient's pharmacy at this stage? Or are there scenarios where the drug could come through the dialysis center experience despite being external to the bundle, for example? Just trying to kind of best understand the patient journey there to access and growth.

Yes, sure. That's an important question, I think, to really understand how we can make sure that these patients have access. As we said earlier, we remain committed to access for these patients regardless of who the payer is. On the non-Medicare side, it's covered through their prescription benefit. ArdelyxAssist can adjudicate it and they can also work with specialty pharmacies to deliver to the patient.

On the Medicare side, ArdelyxAssist can fulfill that through our patient assistance program. Because we did not file for TDAPA, the dialysis organizations are not buying and billing it. Important to note though, what we've seen is actually increased access when we think about patients, whether they're Medicare or non-Medicare, so more patients today have access to XPHOZAH than they ever have before. I think it's important to note that we've got a path to access for these patients, and we're continuing to be able to address the unmet need for them.

Our next question comes from Joseph Thome of TD Cowen.

Congrats on the progress, and let me add my best of luck to Justin. Maybe the first one on the new program. I guess anything that you can share on the profile of this drug, whether it's extended release? Or is there a way to, I guess, improve tolerability? Obviously, the NHE3 mechanism does result in some diarrhea. I guess, is that able to be modulated given that it's kind of...

Joe, great question. I mean those are obviously the things that you begin to explore in the preclinical work that you're doing. I mean we have obviously years and years of experience and knowledge around the translation of what you see in animal models all the way through to human experience. Obviously, that's one thing that we would look at.

The benefit that we together have learned about what NHE3 inhibition does, right, it's blocking sodium. Fundamentally, that's what it does. Then it's tightening the junctions, gosh, and that's where it works in phosphorus. That was not predictable. Geez, it also has a benefit in pain, which one would never assume that, that was the case until you start the IBS-C work. Those 3 different things that this molecule, NHE3 inhibition does, does open a vista for lots of things to consider, contemplate exactly around the lines of what you questioned, but time will tell. It is early, early in the process, but we were excited to announce its development.

Yes, and a little bit related to that. I guess, maybe can you talk a little bit about why now is the right time? I guess, did you see anything preclinically that you can share that kind of triggered the announcement or anything in the field, I guess? Or is it just kind of continued progress and now I guess anything?

Well, I kind of talked about it in a couple of previous questions is you look at the balance sheet that we have, we've not raised any money for years, and it's on the basis of what we're driving with IBSRELA and XPHOZAH that the balance sheet is as strong as it is. We had a very short dip after the end of -- or the start of the TDAPA period, and we're back with a balance that is what was prior to the start of the TDAPA period. That's an incredible accomplishment.

That then said to me and the team, we can begin to afford to explore other things that we might be able to do to build this company. 531 was an obvious choice because it was something we knew pretty well, and we began to pursue that. I think as you heard in my comments, I think this demonstrates that we've been extremely good and thoughtful stewards of the capital that we have. I think this is an example of how we plan on deploying.

Our next question comes from Julian Harrison of BTIG.

It's great to see another beat and raise for IBSRELA. You're at more than 70% year-over-year growth at the lower end of the new range for 2025. I guess looking to next year and beyond, I'm curious to what extent you think this cadence of growth can persist?

Then looking towards the intellectual property estate, are you at a point now where you can talk more about how you're exploring extending exclusivity potentially beyond composition of matter? Are there any pending patent applications that you would highlight as potentially being Orange Book eligible?

Yes, great questions. It is exactly what we are doing and should be doing to protect the franchise that we're building. Yes, of course, those things are all the things that we will contemplate and talk about when we can. I think what's important about your question is the growth that you see as you described for IBSRELA, the potential is spectacular, right? If you look at the number of scripts that we have compared to the market that's out there and the growth that is being driven by the need that's out there for the patients by Linzess and others, that is to our benefit over time.

Our belief is that reaching that $1 billion is something that's well within our control or we wouldn't have said that we expect it to be there. I think as we gain and continue to gain more perspectives and guidance, we can provide more guidance on when and how that is achieved. We're excited about the future for IBSRELA and what we're doing now, certainly with IBS-C and hyperphosphatemia with XPHOZAH. This mechanism, these drugs are making a huge difference. It's the work that Eric and his team are doing to show that conviction in physicians and getting those prescriptions pulled through.

Next, we have Aydin Huseynov of Ladenburg Thalmann.

Congrats with a great commercial quarter. Regarding business development activities, just curious on the kind of assets you're looking for? Is it more like a GI space? Or is it more like an early-stage Phase I preclinical? Or would you prefer something like Phase III plug and play or complementary to your commercial portfolio?

The answer is yes to all of that at the right time, right? We're going to take some baby steps as we can begin to afford to do more. The natural thing is to look at therapeutic areas and the close adjacencies of the therapeutic areas that we're currently in. Like any biotech company, we're going to be opportunistic as something demonstrates itself. Me too is not very interesting. Even me better, not very interesting. I think this very special and unique way that we approach commercialization is a really important driver of the considerations that we have for things to bring in. That's the lens from which we look at things.

I think in the coming year, for sure, you're going to be hearing much more of that as we get our legs under us and look at opportunities that we are confident that we will bring in.

One more question, general question for me. You're making almost $400 million in annualized sales. You've got the -- you give about $75 billion long-term guidance and yet you're trading on $1.2 billion market cap. What do you think the market is underestimating, the long-term guidance itself or the future after 2033? Just curious on your thoughts on this.

I'll be completely transparent, and we've talked about this before. I think there's an over-index on XPHOZAH, not giving this engine that we have at IBSRELA that do that it's -- the attention that it's due. What you see in terms of the growth and the benefit that it provides us in profit and operating cash for us to reinvest in the business, whether it is to expand our capacity capabilities on the commercial side, we will be thoughtful and measured in that.

Also, as we look at other things to bring in, it is something that we are looking forward to as we are on the cusp of generating that kind of free cash to build this company even further. I think we don't get that credit. I think if you look at many of the buy and the sell side, they are expecting at LOE, we may or may not make $1 billion. There's no consistency even in the way that people look at this product or products and whether or not they're giving them their due in the modeling that they do. That's our job, right, to also work with each of you to work on that.

I think it's a bunch of those things tell you the truth that I hope by now, we're beginning to get out of the penalty box of we're show me story. I think we've shown everyone again and again and again a meet and beat and that this is a substantive, big and important market, certainly for IBSRELA. As I said in my opening remarks, XPHOZAH is a contributor to that portfolio and will only continue to provide better contribution over time.

Next, we have Prakhar Agrawal of Cantor Fitzgerald.

This is Daz on for Prakhar. Could you comment on any potential tailwinds or headwinds in 2026 that we should be aware of for IBSRELA and XPHOZ?

I can't think of any. I think we're looking forward to getting out of the apices of what the bundle is doing for these patients and being able to help them to the degree that we believe we can and should. The turmoil is significant. I don't think -- I think that's not a headwind. I think that's a tailwind that ultimately is going to help us as we emerge from '26 with this remarkable product.

I think there are only tailwinds for both of them, not only because I'm an optimist, but I think everything that we're sharing with you today says that we've got the wind in our sails that are going to help us propel us to, at a minimum, the guidance that we've given for peak for both.

That concludes our question-and-answer session. With that, I'll turn the program back over to our host for any closing comments.

Thank you, everyone, for joining the call today. We entered the fourth quarter with confidence in our strategy and enthusiasm for the future. We have the medicines, the focus on execution and the team in place to deliver on our vision of a healthier tomorrow for patients. I'd like to recognize our employees, the people behind every number that we share today. Their hard work, ingenuity and resilience continue to drive our success. Together, Team Ardelyx is determined to make a difference. I'd like to end by thanking our shareholders for your continued trust and support. We remain focused on driving sustainable growth and creating long-term value for you. With that, we can close the call. Thank you.

All right. Great. Good morning. Before we begin, I need to read the following disclosure. For important disclosures, please see the Morgan Stanley disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representatives.

And my name is Bob Klingenberger, I'm an Executive Director with the health care team. My privilege to be joined by the team from Ardelyx this morning, Mike Raab, Justin Renz, and Eric Foster. Mike, maybe just to start off, could you give us a kind of a summary update on where things stand with Ardelyx and the recent progress you all have made with IBSRELA and XPHOZAH?

Sure. Bob, so thank you for the invitation, Morgan Stanley. We're really happy to be here. And share some of the perspectives that we have on where we are today with Ardelyx. So it's been -- when the idea for tenapanor was presented to the Board, it was December 23, 2008. And to see the evolution of the company to where we are today, where we've given guidance now for IBSRELA from $250 million to $260 million this year. I don't think people anticipated that we'll be able to accomplish that. And certainly, we're well on the way to our peak revenue that we've spoken about of $1 billion. So our ability to get that, I think, if you look at our growth rate year-over-year is very clear.

For XPHOZAH, that has been a remarkable journey for us in '21, getting a CRL to where we are today, where in the first half of this year, we have generated about $50 million of revenue. So where we are headed, I think with XPHOZAH, is completely proving the idea that we had of not participating in the TDAPA period to ensure that all patients would continue to have access to XPHOZAH.

So between both of those products and then, ultimately, our objective to build a sustainable enterprise in our corporate and business development efforts, I think, we're well on the way. And I think these next 6, 12, 18 months are going to be an exciting time for the company as the trajectory of our growth continues to expand.

And you mentioned the increased guidance for the year, maybe just beginning with IBSRELA, could you give us some kind of color on what's driving that from a -- in kind of the commercial strategies that you've all been implementing?

If I might, let me ask Eric to address it. Eric joined us now over a year ago and has done a phenomenal job in helping us see what the opportunity is, as we expanded the sales organization.

Thanks, Mike. Thanks, Bob. Yes, very confident going into Q2. When we think about the drivers for the sales team, for IBSRELA, the second quarter was our third full quarter post expansion of the sales force. Typically, it takes 2 to 3 quarters to get up to speed. The area business directors, they're building relationships, the reach and frequency into the offices. And what we saw in Q2 was significant increased activity, which led to more new writers, more total writers and, ultimately, led to more new and refill prescriptions.

So I feel really good kind of about the recipe that we have on the sales side. From an omnichannel marketing side of things, we are very engaged on the social media side, driving awareness, intent for patients to go in, ask for IBSRELA. I feel really confident about the position that we have kind of post Linzess. I think it is important to mention that we do have an indication where we can be used first line, and we have seen some of that utilization first line. And really, what we feel there is physician confidence.

So as physicians continue to write for the product, they're seeing the efficacy, the benefit to the patient, giving them greater confidence and they're able to go to it earlier. But we feel like we've got a really winnable position for the long term. We are very pleased with the success that we saw in Q2, giving us the confidence to raise guidance to that $250 million to $260 million for the rest of 2025.

Yes. And longer term, right, the $1 billion peak sales guidance for IBSRELA, I think that roughly translates to 10% of the market. Could you walk us through just sort of the characteristics that are differentiating about the product within the IBS-C market? And how do you feel like that market -- well, you see that evolving and the share evolving to kind of reach that peak number?

Yes, the IBS-C market is a very well-established market. It's a large market. We're talking more than 6 million prescriptions on an annual basis. Over the past few years, we've seen that market grow double digits. So that's giving increased momentum there. But we feel confident that we can achieve that $1 billion even if the market did not grow. But if you think about the patients that are out there, primarily Linzess and Trulance, they offer significant discounts for their preferred positioning with payers, where at this point in time, we do not.

But we know that only about 1/4 of patients are very satisfied out there on their GC-C agonist or their secretagogue. So that leaves a very large market out there of patients that really are looking for something else. So if you think about IBSRELA, it works differently. It's the only product in a different class of therapy. So if a patient were to go on to a secretagogue and not experience the relief or potentially adverse events, there is another option out there for them.

So from an efficacy and a safety standpoint, comparable to what I think physicians are used to seeing. So we've got, again, a winnable position, strong efficacy, safety. Patients clearly need different choices out there. It's a disease that has multiple factors in terms of the etiology of the disease. And so it's important for physicians to have multiple tools in their bag to be able to help patients and IBSRELA is a unique option for them to be able to do that.

And Bob, one thing I would add to that and ask Eric to comment on it is, obviously, we all have probably experienced our health care system in which we all live today and, ultimately, getting prescriptions for new drugs filled is not an easy task for a patient. So I think one of the strategies, Eric, if you could talk about it is we have field access managers that really function pulling through the prescriptions that the [ AVDs ] have generated on the top of the funnel. I think it's a really critical part of what we're accomplishing for that growth.

Yes. And we saw that early success in Q2. So as Mike mentioned, we expanded our field access manager team. And these are individuals that are in the field, working with physicians' offices, working with patients to help be able to pull through that prescription. The last thing we want is for a physician to identify a patient, write a prescription and that patient not be able to have access. So we know with the additional help of the field access manager team, we saw an increase in resubmission rates and approval rates early on in Q2.

So as Mike mentioned, it's really a combination of driving to the top of the funnel, but then improving the efficiency of how patients can have access to the product and the physicians so that they can have greater confidence that they know when they write that prescription that the patient will actually receive it. And we saw really good indicators of that in Q2. And again, all of that together is what's given us that confidence for the remainder of the year and to be able to reach that $1 billion.

Yes. And I guess as you think about -- you mentioned the market doesn't -- you don't feel like it needs to grow to sort of get to that $1 billion peak. Can you just walk us through a little bit of like what the funnel looks like to kind of get to that $1 billion? And maybe a little bit of how you see kind of going from 2025, your guidance now to that $1 billion, kind of the ramp to there -- to get there?

Yes, sure. So as I mentioned, Linzess, Trulance, they are kind of the predominant first-line payers. Tens of thousands of new patients go on to therapy every single month for the class of product. So again, this is a very large product or a market, more than 6 million prescriptions and only 1/4 of those patients feeling very satisfied. So we know that those patients are going to need something else, and IBSRELA is that option for them.

So when we think about what are the levers that we have in order to drive to that $1 billion, continue driving top of the funnel, improving pull-through, and that's what the field access manager team is working on. I think we have a very engaged and motivated patient base. So 35- to 55-year-old females, they are out there seeking information. They are looking for different options, and they're looking for treatments. And we're meeting them where they are.

I mentioned social media. It's an area of strong presence for us out there. And so for us, it's about meeting them where they are, making sure that they have the awareness of IBSRELA. They understand the benefits of the product, the safety of the product, and they feel confident going in and talking to their physicians. So as we think about that over long term, I think there's probably a lot more that we can do as we're looking at patient engagement and something that we'll be focused on for sure.

And Bob, as I look at the market in the way Eric just described it, remember, we said 6 million prescriptions. And over the last couple of years, that business has grown double digit year-over-year. We're seeing tens of thousands of new prescriptions every month. And when we launched, we said it's $1 billion, 10%, and the market has subsequently grown. And at our growth rate, 10% of that 6 million is a really small number relatively. And the opportunity set is spectacular for this product given the benefit it's providing patients.

So to me, I'm incredibly excited about the progress that Eric and the team have made and the beginning of seeing the fruits of the labor with the field access managers coming in and understanding that those investments make sense to accelerate our path towards that peak.

Yes. And as you think about -- you mentioned some of the commercial initiatives kind of early this year and seeing the dividends of that. Are there others that are in the pipeline you have planned kind of to continue throughout the rest of the year and into next year?

Yes. I mean one that I would highlight would be on the patient side. As I mentioned, there are millions of patients that are out there. And for us, I feel really confident in terms of our strategy coming out of the gate and how we've been able to have success over the past 2.5 years to 3 years. But yes, we need to continue to evolve. And I think that really engaging the patients because we know they are out there seeking information.

So we need to be there for them. So I think, again, that's one that I would certainly highlight. But in the future, I would expect to see a stronger presence from us with regards to how we work with patients.

Yes. Maybe just moving on to the XPHOZAH side. Obviously, this year has been a bit of a kind of a relaunch in terms of strategy. Do you want to maybe just talk us through how you've navigated kind of that relaunch, so to speak, and kind of how you feel about the performance so far and kind of the outlook for the rest?

Yes. So for us, it's really been about putting the patient first. And our strategy has been making sure the patient has access to XPHOZAH, regardless of who their payer is, if it's Medicare or if it's a non-Medicare payer. And in Q1, we saw that, that strategy worked, and we were really pleased to see that. And in Q2, it was all about can we now start to grow. And we did see that we can start to grow that in Q2. So to your point, there is confusion out there in the market, there is disruption, and it's our job to cut through the clutter.

So we know working with dialysis organizations, working with HCPs, the physicians, renal dietitians, there are lots of stakeholders in this environment. So our team is very focused on providing the access message, but then also that they understand the reason why is because when you give XPHOZAH in addition to a binder, patients can lower their phosphorus levels. And about 70% of patients that we know cannot lower their phosphorus level.

So just like there's a sizable market with IBS-C, there certainly is a sizable market here as well. And these patients are very sick and they need products like XPHOZAH. So for us, it's about being persistent, cutting through the clutter, making sure that the physicians understand how to access this product. And regardless of who their payer is, they can be confident that the patient can have access to XPHOZAH, and we saw that happen in Q2.

And Bob, I think, as we think about this as a relaunch, certainly, our decision to do what we chose to do has been adding to the clutter, if you will. But the most important thing in that is, as Eric said, having the patient be first. So we gave up 60% of our TAM, right? So 330,000 patients no longer can pay for the drug. But that doesn't prevent us from providing it through our patient assistance program. And the way I look at it is our TAM shrank from 550,000 to 220,000 patients.

So what does that mean in terms of for us to get to the $750 million peak that we described, you only need 60,000 of those 220,000. It's 1/3 of that TAM. And given the clear need that's needed for XPHOZAH what's doing for patients, that certainly seems very doable in our mind. What we do know is if you look at precedent out there of other therapeutics that have gone into the bundle that are innovative, they have some penetration that's better than when it started during the TDAPA period. After that period, it goes away.

And to me and to us as a company and as a team, to know that there was a potential for XPHOZAH to go away for these patients after it's been helping them for a 2-year period of time is unconscionable. So we made the hard decision to do what we're doing, and we believe wholeheartedly, it's the right thing to do.

Yes. And maybe just to help, you talked about the TAM kind of moving. How -- I guess, how do you think about the strategy with the relaunch to make sure that you're getting to that kind of 1/3? The different strategies, you're...

Well, the fundamental part of it, and I'll ask Eric to address is that, let's say, you're a nephrologist, we don't want you to worry whether I'm commercial -- or your patients, I'm commercial, Eric's Medicaid and Justin's Medicare. We don't want you to think about that. We want you to write a prescription if you believe any of the 3 of these patients require additional phosphorus lowering. And then we adjudicate behind the scenes in our ArdelyxAssist program where those will land. So that's the idea is, ultimately, you don't worry about it, we'll adjudicate appropriately thinking.

Yes. And I would just add, just like we have the field access managers on the IBSRELA side, we also have them on the XPHOZAH side, too. So to Mike's point, helping the offices be able to kind of work through the system, it is a new environment for them. And so we're glad that we have a resource there for them and for the patients so that they can help navigate this new environment. And we've seen that success. We saw a month-over-month growth from March.

We saw as a percentage of patients that go on to XPHOZAH, more patients were getting on product in Q2 than ever before. So those are good early indicators for us that the strategy is working. Now it's still early. So we know that we need to continue to move forward and make sure that we don't lose focus. And that's what the team is doing right now.

And just to reemphasize the point Eric just made, Q2 was the largest number of scripts written. Now we lost revenue because Medicare went away, but the demand is there for physicians recognizing that XPHOZAH is required. And so it's working. It just is a new environment and a relaunch that we're doing.

Yes, and maybe just to clarify, more than even prior to the decision.

Yes. I mean, before that, it was Q4 in our growth and Q2 eclipsed it.

Yes. No, that's -- I mean -- and I think as you've talked about the $750 million peak, the sort of smaller TAM, that's now going to only be driven by the commercial, right?

Commercial and Medicaid.

Medicaid.

We like to refer to it as the non-Medicare payer segment. And what that is, is commercial and Medicaid are the 2 predominant, but there's some VA and TRICARE and DoD. And what we saw in Q2 is that part of the business grew from Q1. And that's a really important indicator because that essentially is the paying business moving forward. And so we've got a really close eye on that, and it was good to see that growth in Q2.

Yes. And so we've talked a little bit about kind of your peak goals and some of the guidance you've given for the year. And maybe, Justin, this is a little bit for you as well is, as you think about kind of moving into next year and the evolution of the business, I know, obviously, you haven't given guidance, but approaching that kind of breakeven profitability, how do you all think about that as a kind of a priority for Ardelyx to kind of achieve in the near term?

Yes. I'll make one quick comment and then pass it over to Justin is, we're at a place right now where we've hired an excellent corporate and business development team headed by Mike Kelleher. And we are approaching cash flow breakeven, where we will be able to meaningfully reinvest into this business, whether it's in our associated -- our direct therapeutic areas, associated ones and to be opportunistic. I think as Justin has shepherd us through the various financings that we've done over the last 4 years to get to where we are today, I think it's a critical juncture for the history of the company of where we're going to be in the next 6, 12 months.

Our balance sheet is getting to the point where we have that flexibility and soon optionality to make those decisions that Mike mentioned with our great corporate development team. So you think about the second quarter, where even in spite of the environment where XPHOZAH has less net revenue compared to Q4, with that growth trajectory, we still only lost $17 million in Q2, but that included around $14 million to $15 million of noncash charges. So you can see we're really approaching that cash flow breakeven point relatively soon.

And that will allow our team to really be able to thoughtfully look at a lot more things than maybe we could have in days gone by and really build that pipeline and help build us a great company.

Yes. And maybe just talk us through, Justin, if you could, kind of where you sit kind of Q2 balance sheet and how that kind of -- from a capital allocation priorities going forward, how you think about kind of utilizing the various levers that you mentioned there?

Sure. We finished the second quarter with about $238 million in cash, which is great. And as I mentioned, our utilization for operations is quite low. So we've always tried to thoughtfully invest in the business. Our inventory is in great shape as we prepare to meet the needs of these patients that's coming. So we're in great shape there as well. We've always tried to be thoughtful about capital. We look very closely at our cost of capital and whether that's equity debt or another instrument.

So I think now we're at that position where our team will have a lot of optionality, if you will, flexibility to look at different things because we can support a growing business going forward.

And maybe in terms of allocation of that capital, Mike, maybe talk to us a little bit about -- you mentioned the corporate development team, but is there -- what areas might you kind of initially look to kind of build? And are there kind of...

We have actually a Board meeting this week up in Boston. And one of the questions we all continue to ask, Eric, is, hypothetically, if money weren't an object, what else would you be doing with the 2 teams that we have, right? So you can't forget the bird in the hand, right? So as you look at capital allocation and are we optimizing what we're doing with the conversation we just had about IBSRELA and XPHOZAH. So that's always going to be probably job one is to make sure that capital is appropriately and investments are appropriately focused on those 2 areas.

Secondly, if you look at renal, GI, that makes sense. But then what are the associated nearby indications or therapeutic areas, cardiorenal, you look at hepatology and other things like that. And then as I said, you'd be opportunistic. We always want to optimize our manufacturing. So that's something we will continue to do because every percentage improvement, even though our gross profits are phenomenal, any improvement there is going to be critical given the volume is going to be going through.

Yes. And maybe, Eric, today, how much -- with the existing portfolio, how much sort of synergy is there in terms of kind of GI...

Yes. They're very distinct and different. As I think about it, they're very different, and that's one of the reasons why we have 2 completely separate really businesses, not just sales force, but 2 completely separate business units led by 2 different general managers. And really, the -- that's important because we want to be able to pull through those insights and go deep. And so when we think about business development, we have a lot of deep insights in GI and nephrology that can really help us out.

But I also like to say we also have a core strength in commercial execution as well and pull-through. So while those 2 are very different, our commercial strategy and execution kind of brings them together. So in the event that we were to find something that was adjacent or different, I do feel confident that we can take and be successful.

We do have shared services and ArdelyxAssist and reimbursement, a lot of the strategies there go back and forth. So the field force, the physician-facing, the HCP-facing people are clearly distinct, but there's a lot of shared services internally.

Yes. And maybe we talked beyond the therapeutic kind of criteria when you think about business development, what other criteria are out there kind of...

So great question. For us, certainly, it's got to be distinct. It can't be -- me too is not terribly interesting, even me better. So it's got to be an unmet need. This is -- everyone says this, right, that it's got to be an unmet need. It's got to be novel, all those things. So it's not unique that we're saying things like that, but that's the lens that we look at opportunities through.

Yes. And any sort of phase in development kind of looking broadly or...

Well, obviously, what we can afford today is different than what we can afford a year, 2 years, 3 years from now. So you always look at it through that lens. As Justin pointed out, we're -- we try to be very thoughtful about capital allocation and where and how we spend dollars that aren't ours, right, shareholders' money. So we try to be very thoughtful about that. But -- so what does that mean earlier stage now? Ib2, thereabouts sort of things. And then later, buying revenue is tough just philosophically because one would argue that mostly that's baked into the price. But we'll look at everything across the stages of development and commercial as well.

Yes. And how do you think about kind of in the context of kind of the approaching cash flow breakeven at something earlier stage, kind of incremental investment in that. How do you think about kind of balancing all of that capital allocation, P&L?

Yes. I mean, any time -- I mean, you know this, Bob, any time you look at a transaction, you do a deal model, that's going to include the additional regulatory, clinical, all the headcount that are required in there. So I think you look at the entire cost of development of something that you're bringing in, and then we look as to whether or not it's affordable at this stage. Or is it affordable now? Almost, but then clearly will be, so you can take a little bit more risk. So I think as we balance both where we are with cash on hand, we're collecting money now, which is amazing to be able to do and the growth of the business kind of gives you a line of sight in terms of what is and isn't affordable.

Yes. And we've talked about what individually with each product, sort of the $1 billion and the $750 million of peak kind of revenue. You all have talked about kind of the IP profile of the product. That implies kind of a lot of growth in the medium and longer term. How do you kind of think about balancing the investment needed for that, investment needed to add additional portfolio?

Yes. I mean it's a good problem to have, right? First and foremost, is as we look at the expansion that was done and the lift that we're seeing, the investment now in the field access managers and the lift that we're seeing, any script that doesn't get filled, the fact that you as a physician have written a script for me, your patient, and I go to CVS, Walgreens, whatever it might be, and it doesn't get filled, that's awful, right?

Because you've got 2 parties that are critical for ultimately generating the revenue for us that have done their job and the system then fails them, right? So for us, the fans and what we do with ArdelyxAssist is absolutely critical. So I think we will always look at that first because it is the bird in the hand to make sure that you are optimizing those. Anything to add to that, Eric?

No. I mean, I think I would just reinforce that the opportunity is there, and we just -- we need to continue to improve to pull through those patients. And I like what Mike said, we've got 2 parties there, 2 stakeholders there that have done their job. And if we can help pull through the system, that will only make things better.

And we feel like we've got the right number of salespeople out there given the market that we're focused on to drive top of the funnel. We're always continuing to kind of look at our organizational design and our numbers there, but feel good that they're driving top of the funnel, we've got the field access managers pulling through, and we just need to continue to keep getting better there and the opportunity is there.

Yes. And it's -- I talked a little bit about the kind of the trajectory from today to where you have your peak guidance. Maybe just kind of as a thought exercise, 5 years in the future, end of the decade, where do you sort of aspirationally perhaps kind of see the company?

Elegant question. We haven't guided as to when -- but I like the thought exercise. But if you look at our growth rate and look at our gross profit, look at our expenses, I think the math is pretty straightforward. And the trajectory that we're on gives me great confidence that we will be generating that free cash flow not too far on the horizon where we can continue to build this. And then the amount of free cash flow that comes allows us to do bigger and more interesting things that we contemplate now, but can't afford it, right? So there are things that we look at and say, gosh, that would be ideal. It's not yet time. So it gives us flexibility.

And then to challenge Eric, with the 2 products that are on the market now, what more can we do for those? What more can we do to expand those peaks if it's even possible, right? So that should be the thought exercise when you have products like these that are making such a difference for the patients that are taking them. You must always go through it at 10% penetration, what about the 90% they don't get it. 25% of patients are satisfied. 75% of patients are not satisfied. So how do we make sure that we do everything we can to address all the patients that have the need. So that's the exercise we go through.

Yes. And maybe as you've guided for IBSRELA for the rest of the year, as you think about 3Q, 4Q, anything kind of that -- aside from the different commercial initiatives, anything else that you guys are kind of laser-focused on for the rest of the year in terms of execution?

Eric, anything pop back to you? I mean, I think, the answer is everything. You have to be juggling 1,000 things in businesses like this, just given the complexity of the health care environment in which we all operate. And you can see when you have metabolic drop that it ripples through the system. So it is something Eric and his team are laser-focused is execution as well as possible because there are patients at the end of this that is, again, you the physician being the patient, we do our job, always looking at optimizing that pull-through is certainly one of the most important thing.

Yes. I would say 17 days. We've got 17 days left in this quarter, and that's all I want the team focused on right now. So 17 days to help as many patients as we possibly can. I believe in our team, I believe in our company, I believe in our products, I believe in our strategy. And the team through strong commercial execution and improved prescription pull-through put up some record numbers for us in Q2.

And I just want the team right now focused on these 17 days. When Q4 comes, we'll deal with it then. But I do think a lot of it is execution for us right now. And we know if we do our job, it helps the company out, it helps more patients, and it's a good win-win story.

My guess is that was a message to the field.

Yes.

Yes. Well, I'm sure they're listening. As you talk about the Ardelyx story with investors and analysts and the like, what kind of the 1 or 2 things aside maybe from a lot that we've been through already, but do you feel like people are kind of maybe just missing or you want to just make sure that to kind of reemphasize for folks?

Yes. Very simply, right, and clearly, I'm terribly, terribly biased with what I'm about to say, is that we're undervalued, right? If we've just gone through some of the metrics that support, justify, demonstrate why $1.750 billion are doable, and we're on the path for that. I would argue at just shy of $1.5 billion market cap, we're well undervalued given the trajectory of where these businesses are and what this team has accomplished and what it can continue to accomplish, whether it's with these 2 programs and/or additional ones that we can bring in.

Again, that's my bias as CEO of the company that we don't get the recognition that I believe the company and all of our employees deserve. That to me is probably one of the most important things that we try to emphasize when we're speaking to whether it's investors, analysts, anyone who wants to hear the story of the opportunity set that lies here.

Yes, yes. I know we're kind of running up against time, but is there -- aside from the things people are missing, as you look kind of to the rest of the year, we talked about the motivation and things like that. But anything else you want to just emphasize for folks?

Yes. I mean, Eric said it is if you look at quarter-over-quarter record-breaking growth with double-digit trajectory, we're navigating and doing something certainly with XPHOZAH that's never been done before. And just to remind people, when we got the CRL in 2021, we did something. We did a formal dispute resolution and then in the AdCom, no one believed we'd win either of those. We won that, and that's never been done in the history of the country, right?

That is -- most people feel that, that's a failing path to go down with the regulatory agencies. However, because of the data, the patients need that's there and the results that we've now demonstrated with the products on the market, obviously, we celebrate the fact that we were right. So I think continue to have faith in the fact that this organization, this company, our focus on the patient, drugs that are differentiated are going to literally and figuratively pay dividends for the patients who need these drugs and for our shareholders or prospective shareholders with what we can accomplish from here going forward.

And again, that's my bias speaking, but I think it's also some pretty black and white trajectories and performance that have happened since we've launched these drugs that should demonstrate to folks what the organization can accomplish.

Well, we're just about out of time. But Justin, Eric, Mike, I appreciate you all joining us this morning, and good luck with the rest of the conference.

All right. Bob, thank you very much.

Thank you, Bob.

Thank you.

We're going to start the afternoon session. I'm Yigal Nochomovitz, biotech analyst at Citi. This is our back-to-school Biopharma Summit in Boston. If you have questions, if you're in the audience, just know you can chime in with the microphones. And also for those listening online, welcome. So the next session is with Ardelyx. And I have with me the senior management, Mike Raab, President and CEO; Justin Renz, CFO; and Eric Foster, CCO. So thank you all very much. Great to see you. Thanks for coming in.

So I guess maybe to start out, Mike, if you want to just kind of summarize where you are with the business, 2 products that are gaining momentum.

Sure. Thanks, Yigal, and to Citi for inviting us. I think we're at an incredibly exciting time for the evolution of the company where you look at the decision that we made to not participate in TDAPA. First, let's get that off the table because that's certainly a question that we get a lot of that, that strategy is working. We're seeing since February month-over-month growth of prescriptions. And you see the total prescriptions, whether they are patient assistance and commercial and Medicaid that we're reading -- that we're meeting the place where we've had more prescriptions written than previous months.

So the growth is there. Is it growing as fast as we would like? Not yet. But I think the turmoil that the dialysis community is experiencing really speaks to why that is happening. But you do see the conviction of physicians to get their patients on XPHOZAH. So very excited about that. I think with what you're seeing with IBSRELA, the growth that we saw in Q2 only continues. And our enthusiasm for having IBSRELA be a $1 billion drug clearly is there, if you look at the growth rate and how that continues. So $1 billion is certainly on the horizon for us and with IBSRELA and excited about the $750 million that we're confident we will meet with XPHOZAH.

Okay. Well, maybe we can start with IBSRELA. What are some of the forces in the market that are contributing to the strength? And how are you messaging in terms of the value proposition relative to others that have been more entrenched in the marketplace longer than you?

Sure. Eric, why don't you go ahead?

Yes. Thanks, Yigal. Great to be here. The IBS-C market is -- it's a large market and a fast-growing market. It's well established. The past couple of years, it's grown more than double digits. So we're very pleased to see that and certainly feel that IBSRELA has contributed to that. In terms of -- when you look at the opportunity and really the patient need in the IBS-C market, traditionally, patients have really only had one class of drugs, secretagogues that they could go to, to help with their IBS-C. And we know that only about 25% of those patients are satisfied or very satisfied with their treatment.

So the opportunity for us is really a different mechanism of action, one that provides similar efficacy and safety. So for those patients that are out there that are not satisfied, whether it be through lack of efficacy of the product or safety or tolerability, we know that IBSRELA really can help those patients out and meet that need for those patients. So we've been really pleased with the growth trajectory that the brand has been on. Obviously, Q2 was a great quarter, a lot of momentum as we head into the back half of this year.

And how do you identify those patients? Because you can have people that are not satisfied with the drug, but then they may not know what else is out there, right? So how do you get to that?

Yes. Great question. So we certainly -- we have our sales force, which, as you know, completed its sales force expansion at the end of Q3 last year. So we've got 3, full quarters under our belt and really feel like they're hitting their stride. We also have great omnichannel marketing that's out there that's bringing awareness, greater awareness of IBSRELA out there, not just to patients, but also to physicians.

And for us, it's a fairly simple diagnosis, if you will. So does the patient have IBS-C? Are they currently on a treatment for IBS-C? And are they continuing to be or to be experiencing symptoms? Or are they not satisfied with that treatment? Maybe IBS-C is getting in the way of their daily activities, and the patient is looking for something else and looking for something new. And that's really where we know that IBSRELA can come in and really be a help for those patients that need it.

The thing to think about Yigal with that is not until the launch of IBSRELA, was there anything really different that a physician could offer a patient. So it got to a place where why would patients keep asking for something when there wasn't there. So I think the work that Eric and the team are doing to educate both the physicians, but also the APPs and the staff of gastroenterology practices. Finally, they now see that there is something different. There's an option that they can try.

And as a physician, you can imagine they never would have offered something that wasn't -- they didn't have an option to offer something different. So I think what we've seen in these 3 years since launch, where we're beginning to gain that foothold that you need and the growth that we're seeing out of it in terms of 75% of these patients are not satisfied. They're not getting the relief that they need, and it really interrupts their livelihood and the lives that they can lead.

So for us, getting that communication out there and the omnichannel work that Eric's team is doing, very engaged informed patient population to make sure that they ask the physician, is there anything different? I've heard about IBSRELA. Can I try that?

So that sounds like a lot of the growth is coming from the -- essentially the switch market? Or is there growth from new starts as well?

Yes, good question. I mean we certainly do see some first-line utilization. I think as physicians have gained confidence and experience with IBSRELA, they've gone to it more first line. But due to payer dynamics and our internal positioning of the product, we typically position ourselves after a secretagogue because we know that there's a tremendous opportunity out there. Patients need something else. It's a multifactorial disease. And so you need drugs with different mechanisms of action. And there's a clear position for IBSRELA out there. And we feel like that's the right path in terms of focusing after a failure with a secretagogue. But yes, we do see some first-line utilization for sure.

Of course, so there are many dynamics to growing the market, and we can get to each of them. But what about just the overall persistence on therapy? Are you seeing -- what does the data show you in the market as far as time on therapy versus what the prior options that were not working for people?

I mean I think what's interesting is you look at the secretagogues, whether it is a relapsing remitting disease or tachyphylaxis that happens with an agonist from a biological perspective. You do see 5 or so scripts a year generally. With an inhibitor, you don't get necessarily tachyphylaxis. And our objective and what we see is more refills over time that persistence is there.

Okay. And then you mentioned the $1 billion number, you've been saying that for a few...

Since launch.

Yes, so that's coming from what you've described, the growth in the switchers. And then, I mean, what about just -- I mean, price, I guess, has a little bit of an impact, maybe not huge. What else? Is there just an overall growth of the market period for everyone?

So honestly, the market -- and I talk about this all the time, the market could stop growing and we get to the $1 billion because if you look at the millions of patients that are being treated today for IBS-C, given our price, given our position in the market, you need way fewer than 200,000 patients in order to get to that $1 billion. So if you look at it on a patient basis, it is nowhere near the number of patients that are currently on GCC agonist.

And with 75% of those patients not satisfied with their current therapy, there is ample room to grow within the established market. But as Eric pointed out, we're seeing organic growth through first-line therapy. Our clinical trial was a first-line indication. We made the decision knowing the dynamics of the market that we would play in the second-line space.

So at the moment, are you doing any sort of post-marketing studies or you don't need that at this point?

So we do have the pediatric indication to commitment to -- that you make to the FDA. And we'll always explore other things that make sense. But at this point, we're not besides the pediatric studies.

Okay. Okay. And so -- but you still have presence at conferences and so with regard to keeping up the marketing.

We'll be at ACG later this year and absolutely go to both local and international conferences.

So towards the goal of $1 billion, you haven't said sort of like when, right? Or have you given any range as far as like is this by the end of the decade? Or is this by a certain time?

No. I mean -- and I think that's certainly the next phase for us to lean into that and give you some more perspectives on it. But at our growth rate with the guidance that we've given just for this year, either we need to slow way down after this year to wait to get to $1 billion or if we keep at the rate of our growth, we'll get there before LOE for sure. So that's where I think as we're trying to get people to understand in terms of the opportunity that IBSRELA presents that some of the conservative views of how this business grows, that's our job to change those minds.

Okay. And remind us what the guidance -- just -- you raised it a little bit, right? Just remind everyone what it was and what it is now. And did you give it for each product.

So no, we gave guidance for IBSRELA from $260 million to $250 to -- $250 million to $260 million to $255 million to $265 million. XPHOZAH we're not yet giving guidance. Just given the turmoil that the market has, what we have done is our confident -- spoken about our confidence that XPHOZAH will be $0.75 billion. We've not given a time frame for either 1 of the 2 per peak.

Okay. What -- as you grow the product, what else are you learning about as you scale? Are there new challenges as you scale? Or is it more of the same blocking and tackling, just finding more people, getting more people on therapy?

Yes. I mean, good question. I mean, we think the opportunity is there. We know the patients are there. So if you think about our path to $1 billion, you have a sizable market that continues to grow. As Mike said, we don't need it to grow necessarily to hit the $1 billion, but it is continuing to grow. We've expanded our sales force to really drive to the top of the funnel. So now we're calling on more high-writing GIs, more high-writing non-GIs and more APPs, so nurse practitioners and physician assistants.

So feel really good about that sales force expansion. But it's equally important to make sure that you're focused on pulling those patients through. So when the physician identifies a patient, they're able to get access. And so as we said earlier, we expanded our field access manager team. We saw early signs of success of that in Q2 around resubmissions and approval rates. That's still very early in its expansion that just started April 1 this year. So this is -- we're moving now into our second quarter of that expansion.

And then I think as Mike mentioned, we know that we have a very active and engaged patient. So we need to find out ways to better engage them so that when they raise their hand and they ask for IBSRELA that the physician is aware of it and they're able to grant that. So for us, I wouldn't say it's new learnings, but I think it's just getting more efficient and tighter around those key components around driving to the top of the funnel, pulling those patients through, driving greater awareness with patients so that they can go in, they can talk to their physician about that new option that they need with IBSRELA. And in fact, they can get the medicine that they need that the physician feels that they need. So we feel really confident about those elements of the business.

And we all hear about it all the time and have our own experiences of how difficult it is to get prescriptions filled, right? And it is -- the dynamics around retail pharmacies are -- it's a terrible business, very low margin for retail pharmacies. So any distraction getting a prior authorization filled is taking away from what it is that they're doing day in and day out. So that's why the FAM team that Eric has put in place is so critically important because the sales force is driving the input at the top end and pulling those prescriptions through is critical. And the system is set up in such a way that it makes it pretty difficult to do that.

Do you -- what about going from the patient side? Do you -- is that something you do much like on the social media platforms directly to consumers? I mean I see so many pharma ads on CNN, it's unbelievable every commercial break, right? But I don't think I've seen IBSRELA yet.

No, I don't think you're going to see us on CNN right now. We're always looking at different media channels and way to reach patients. And certainly, we need to make sure that we're driving awareness for these patients. To your point, though, yes, we absolutely do have a presence on social media. We see high engagement there and very pleased with the results that we see. And we're continuing to evaluate those channels to see where we can get the right mix because driving patient awareness and driving them into the office is definitely a priority of ours and one that we're going to be focusing on a bit more in the future.

And we do know that the rate of -- if I'm a patient going to see you as my physician, my asking you for IBSRELA or another therapeutic has a high rate of acceptance. So getting that patient who are already extraordinarily engaged in their disease to be asking for IBSRELA is certainly an important part of it that we do.

Is that trackable data to know that? Because that's interesting, right? If you couldn't know like whether -- how that was -- this therapy was initiated, whether it came from the patient suggestion. I don't know if that's information I think...

Yes. I mean we do kind of your standard ATU, so awareness trial usage, internal market research data, where we look to understand how many patients are aware when a physician comes in or when a patient comes in and they ask for the brand, what percentage of those patients are granted. But those are internal research numbers that we use to help kind of guide our marketing strategy and our tactics.

Yes. Okay. So you kind of gave a little bit of a notch to guidance a little bit, but you're obviously watching -- Justin is probably watching every day. I think I know he is. Is there a potential to go a little higher with the guidance? Or you just -- you feel good about it for now?

I feel good about it now. And certainly, our objective is always to overperform, right? I mean it is -- I think you've known me and known us a long time where it has become a drinking game for the company that I'm not going to get over my skis, right? I'm going to give you numbers that I have great confidence that we're going to meet. And our objective is to make sure that we show you that we can do better.

And just we went into the year at $240 million to $250 million. And then with a really strong quarter, we really felt like we've got good momentum, and we were able to move that to the $250 million to $260 million range. So just to clarify that number that we moved to $250 million to $260 million.

Right. Okay. Okay. And this was -- when did this -- you first introduce the IBSRELA guidance? Just to give us the history.

It was a year after launch when we first gave guidance for IBSRELA and that is not an unfamiliar path to us. Just we want to make sure that we're confident on the trajectory of where we are. And if you look at the non-Medicare business for XPHOZAH, it's on the trajectory that we think it needs to be on. We want to see a bit more time as the DOs are going through the TDAPA process for binders, it is a distraction for them looking at what we're offering, right? Because we need those dietitians. We need the information from the DOs in order to put in front of insurers the justification, the rationale for filling the script.

Yes. Well, remind everyone what the status is outside of the United States with this trial.

We have a partnership with Kyowa Kirin in Japan for hyperphosphatemia only. And in China, we have a relationship with Fosun Pharma for both indications and then in Canada for both indications.

Okay. And how are those helping the P&L right now?

Canada is a small market, so de minimis. But if you look at KKC, and Justin can address on this, that is a supply agreement that we have with them as we -- if you recall, when we were going through the value of death after the CRL, we monetize the milestones and royalties. So there's nothing today, but some manufacturing benefit.

Correct. We supply them right now, the active pharmaceutical ingredient that they have it on their own. And so they've had very good success since launch. They got approved actually right before we did in the fall of 2023. They've been doing well, and we provide product revenue from our sales to them every quarter. And so we supply them on a regular basis. And it has a modest margin, but it's profitable.

So they can take that API and they can go for ideas if they wanted to.

No. So they only have rights...

They can. So that's open then.

It's actually the second largest market outside of the U.S. for LINZESS. I think one of the dynamics we all need to be aware of as this kind of question is the right one is with MFN, one needs to be very thoughtful with the chance of MFN occurring, one needs to be very thoughtful whether or if you out-license outside the United States.

Yes. You don't want to jeopardize market, obviously, despite possible short-term upside.

Exactly right.

What about Europe?

Same thing. I mean if you look at...

Same story.

Same story.

Okay. So you're being very judicious about what to do.

It's the unintended consequence, right, of the discussions that are occurring, it will potentially prevent patients to benefit from the innovations that happen.

Okay. Well, speaking of MFN, obviously, the related topic is supply chain and manufacturing. Just where does it all happen with your API and your fill and finish?

So Europe broadly, and then it's brought to the states where we do tabling and packaging.

For both indications.

Correct.

Okay. Okay. All right. So let's talk a bit about XPHOZAH. So you've characterized it as kind of like a relaunch, which essentially is what it is, although it's going well. Is it simpler now with this situation? I mean, is it easier in some sense? Or is it...

That's why keep trying to convince Eric. This is a cakewalk, no problem.

Yes, I'm not sure that it's easy, but I'm really proud of the team and what they've been out there doing. I think just the continuous contact and messaging around access, regardless of who the payer is, patients have access to XPHOZAH. We started that messaging in late last year, been very persistent in Q1 and Q2. For me, Q1 was really about understanding is the strategy working. And I think we got really good strong signals of that in Q1.

And in Q2, it was can we start to grow the market? And can we start to grow the non-Medicare payer segments. And as you heard me say in our earnings call, we have seen very positive signs, more new writers, so growth in new writers Q2 versus Q1, new and refill prescriptions growth Q2 versus Q1 and more patients as a percent going on product, whether they're through our patient assistance program or the non-Medicare payer segments are going on product in Q2 versus Q1.

And now this -- what's going on behind the scenes with some of the legal maneuvering, you've characterized that as kind of just pure upside, don't expect it, but if it happens...

I mean if you look at our TAM, which before the TDAPA period was 550,000 patients, get rid of 330,000 or 60% of those patients, which are Medicare, our new TAM is 220,000 patients. And the vast majority of patients are underserved with binders, but self-reported by physicians, they think 30% of their patients are in need of an additional product for managing hyperphosphatemia.

So if you look at that TAM, those reports from physicians need 60,000 patients to get to $750 million. So we have plenty of room within the 220,000 patients to generate the revenue that we guided to and continue to be able to afford giving patient assistance to those patients that are on Medicare.

And right now, you're at you're at obviously a small percentage of the 60%.

Absolutely, yes.

Okay. But I mean, it's very well understood that -- I mean, it's -- everyone knows it's not a binder and that's not a debate anymore, right, or never was.

People get confused still, but Yes.

What about some of the competitors? I mean, I'm trying to remember, I mean, AURYXIA is old now. That's been out since, what, 2018.

Yes, and it's part of the TDAPA period.

That's okay. And there's another one...[indiscernible] How do those -- are those competing with you? Or are they just not really -- are they just going to add them into to the...

So if you look at our label, it's for add-on therapy or when people can't tolerate the binder. And if you look at where we are in the study that we ran for -- we call it OPTIMIZE, where you look at a base therapy of binder, you cut the binder in half, keep it the same or eliminate it at XPHOZAH, far more patients got to goal. So we can work well in concert with binders, which is the vast majority because with binders alone, 80% of patients never hit the goal that they need to have. And hyperphosphatemia is an independent predictor of morbidity and mortality in these patients. So if you can get more people to goal, theoretically, you then are going to improve their outcomes. And hyperphosphatemia is something that is poorly treated at this point with just one mechanism, which is the benefit that XPHOZAH brings.

What other -- are you collecting any other RWE, real-world evidence?

We do have an ongoing RWE study. We expect it could read out later this year.

And what would be in that? What would be -- what kind of metrics would be.

I think it's serum phosphorus first and foremost, and we're going to collect all the outcomes that you can get in that period of time. But it's since launch and certainly through TDAPA this period, this is not going to be something you filed with the FDA. This is something that's just giving a perspective of what the benefits are that you get with XPHOZAH.

I remember one of the debates back at the -- was it the first time that the outcome -- the whole question of no outcomes data with this phosphate biomarker. Is there still a push in academic amongst the academics to ever do that?

I mean...

It would be -- obviously, if you had that would be a big tailwind.

Sure. And this is a patient population that dies awfully 20% to 25% a year, right? So to truly determine a specific cause of death in an intervention statistically is almost impossible to do and would take forever. Academically, there's always an interest, right? As a physician, they want to know that the medicine that they are giving their patients is going to have a benefit.

We do know, if you look over time and certainly now in the period that they're in greater utilization of calcium-based binders, that's really bad for patients because then it gets deposit in the soft tissue. And noncalcium-based binders are important. Clearly, with Sevelamer taken over the vast majority of the market. And still, you're not getting patients to goal with XPHOZAH.

Remind me on the -- just what is the LOE again for...

So it's April of 2034.

Okay. So you still basically have a little less than a decade. So...

Plenty of time.

For both -- this would be for...

August of '33 is composition of matter that IBSRELA and then use is April of '34.

Okay. And did you ever explore are there other indications that you would explore or could explore...

For XPHOZAH?

For tenapanor, just in general. That's -- I know you don't want to deploy new capital to new projects right now, but I'm just curious.

Yes. I mean we're getting to a place where that is within the line of sight given where we think free cash -- when free cash flow is going to come. But sure, if you look at diversion of sodium, tightening junctions in the GI tract and the other benefits that you see with any HG3 inhibition, there's 100 or more places that we looked at over time. And we think that anyT3 inhibition writ large has a potential benefit for a lot of patients.

Yes. Portfolio expansion, business development, I mean, I know you look at a lot of things. I'm sure say no to most things, which is...

For business development, you have to kiss a lot of frogs, right? You just have to -- that's the name of the game. Bring on Mike Kelliher about a year ago and the team that he's built, we're looking at a lot of things where clearly associated therapeutic areas make sense, our specific therapeutic areas make sense, and we'll be opportunistic as well. We also -- back in '21, when we got that CRL, we did put to the side a couple of different programs that we found interesting, right? The science that created tenapanor has created a number of other molecules that we will hopefully be able to revive.

You had something in, was it a hyperkalemia...

We had hyperkalemia and metabolic acidosis, both of which we put to the side, just given the challenges of that market. And frankly, some of those are probably -- would go straight into a bundle, which the lack of alignment in terms of innovation for patients and what CMS is trying to do is exactly what we're fighting against. because your incentives are against actually developing things that might end up being in there.

I mean I know that no one should expect this to reverse with the whole proceeding with CMS in the bundle. But I'm sure you have very good attorneys like what is the case that is being made? And is it a case that you think is going to resonate with whatever circuit of appeals you're dealing with right now?

Yes. I mean whether or not it will resonate is one question. The basis of our argument is that CMS overstepped its remit. This goes back to the Chevron case that the Supreme Court decided where the rules that -- or the laws that were established by Congress with MIPA in 2008 did not include oral-only drugs as the definition of a dialysis service. And that's the basis of the argument that for Chevron, they've overstepped their remit and that should be changed as a result. That's the argument.

Okay. And this -- and there is something coming up very soon.

Yes. So September 25 is the hearing in front of the District Court and...

What are the scenarios there? It's like -- just up or down.

It would be our estimation. And when that happens, there's no statutory requirement for them to report in a certain period of time. So it could be quick, but it could take longer time.

And then would you invest -- I guess they just turned it down, you would appeal or you would just leave it? Or how does it work? I mean.

I mean, certainly, you can continue -- that's the whole beauty theoretically of our system is you can continue to appeal all the way to Supreme Court. That's not a decision that we have yet made.

Okay. All right. What other -- so obviously, the quarterly guidance and the sales is critical right now. Any other catalysts that we should be aware of in terms of just maybe on the OpEx side or just anything that we should be aware of in terms of...

Well, I'm obviously biased sitting in the seat that I sit that I think a very simple catalyst would be even for IBSRELA to get the proper attention and value that it should. I think we have delivered again and again the numbers that we say we're going to. And I think the vast majority of the sell side don't yet see a $1 billion opportunity with what we're doing with IBSRELA.

So let's say, XPHOZAH on the side, for $1 billion drug, given where we are trading today, I think shareholders would benefit from understanding that there's an upside to Ardelyx and certainly IBSRELA at a minimum with what we've been executing. And the same then holds true with XPHOZAH. When you add that into the portfolio, what it is that we're doing, revenue that we're generating, profit on the horizon and how we would reinvest that free cash flow with the kind of excellence that we've demonstrated in commercialization development, that's something that I think needs to begin to resonate.

What have you said about the time lines for the breakeven and think -- have you talked about that?

We've not gotten specifics into it. Certainly, we will. But the math is pretty straightforward if you look at our performance. And we tell you our top line, tell you what our expenses are. It's not that far in the...

Yes. The other thing I've seen some companies do is they'll give guidance for the year, but then they'll sort of give more a little bit less in focused guidance kind of saying a range that we're going to get to the number that you're saying by X to Y, right, or give a CAGR, like that kind of...

No. And I think something...

Those are interesting things you're thinking about.

Oh, absolutely. No, I mean it's -- the beauty of the business that we've built, it's relatively simple at this stage, right? So that's why if you just look at the math, you get there pretty quickly. And then factoring in reinvestment of that capital, how and when we do that, absolutely important.

Okay. Very good. Do we have questions from anyone in the audience? All right. Well, thank you all. Appreciate it.

Thank you. Thank you very much.

Thank you.